Detroit property values are rising ― and rental rates are going up

Yahoo

28-04-2025

Homeowners in Detroit got some good news in March about the value of their properties: A University of Michigan report showed that owner-occupied houses in Detroit gained $700 million in value in 2023, on top of about $4 billion in rising property values over the past decade, as the city's recovery gathered steam, with the biggest gains for Black homeowners.
So, all's rosy with Detroit's housing market, right?
Not exactly.
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As upbeat as the new U-M report was for owners of their residences, Detroit's renters still face many and varied challenges. And there are a lot of renters in Detroit. Roughly half of all households in the city rent, and 60% of all families with kids under 6 years of age in the home are renters.
Depending on whom you talk to, the rental housing market in Detroit stands somewhere between "troubled" and "calamitous." Affordability, lead abatement and other issues remain unsolved problems.
Detroit's stock of single-family houses remains key to understanding the problem.
More than many cities, Detroit became a city of single-family detached houses in the early 20th century, with the success of the auto industry. Those with money could afford upscale neighborhoods like Indian Village or Boston Edison or University District, while working-class families owned smaller wood-frame bungalows and the like throughout the rest of the city.
Tens of thousands of those small single-family houses fell into disrepair as the city declined and the population fled. Many of the houses were demolished ― about 200,000 over the past 50 years. And those that remained often became rental housing rather than owner-occupied, said Sam Stragand, a program manager for University of Michigan's Poverty Solutions initiative working in Detroit.
So today, Detroit's housing stock is old ― among the oldest in the nation. The median build year for Detroit housing is 1947, according to a new report by the real estate research firm PropertyShark. In Michigan, only a few places ― Hamtramck, Jackson and Inkster ― have older housing stock.
By contrast, many cities in Sunbelt states like California and Texas have housing largely built since 2000. For the nation at large, the typical home was built in 1980.
This stock of aging single-family detached houses is critically important to the rental population in Detroit. A little over half of all rental units in the are single family houses ― not apartments, but houses. And one in seven occupied residential units in Detroit needs 'major repairs,' according to Poverty Solutions research.
But repairing the city's aging housing stock is daunting. The average cost of lead abatement alone to raise non-compliant houses up to current regulated levels is about $35,000 per house ― clearly beyond what a landlord can afford without raising the rent, according to a presentation by the non-profit Center for Community Progress in Washington, D.C. that also provided data for this column.
Just the fees for lead inspections and certificates of compliance can run well over $1,000. As a result, the compliance rate among landlords tasked with meeting the city's lead abatement regulations is low ― only about 10% since 2017.
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Many people bash landlords for not providing better housing, but Stragand says landlords are also struggling. 'There are very few landlords in Detroit that are getting rich,' he says. 'They're working at the margins too. What they're able to get, they're not necessarily able to put back into the property.'
As you might expect, the renters occupying these aging, often run-down houses with unabated lead are among the poorest of city residents. Some 56% of all renters in Detroit have household incomes under $35,000 a year.
That means that more than half the renters in the city are having trouble paying the rent. Paying more than 30% of your household income is considered a burden, and that's where many of Detroit's renters find themselves.
Under that 30% guideline, Detroiters at the median level of household income can only afford $725 a month rent. But the median rental rate for a three-bedroom home in Detroit is just short of $1,200 a month.
Alan Mallach, an urban scholar with the Center for Community Progress who has studied Detroit in depth, said tens of thousands of Detroit renters have trouble making ends meet.
'There's a huge disparity here between the cost of providing rental housing and what the average renter in Detroit can realistically afford without being overwhelmingly cost-burdened,' he said.
So what can Detroit do to ease the burden on its renters? There have been many attempts to design affordable home-repair programs, and other suggestions to streamline the lead abatement regulations to raise compliance. All that's to the good.
But to start making rental housing safer and more affordable in Detroit, perhaps we just need to squarely face the problem. As we learned during the COVID-19 pandemic, the upper half of the income spectrum tends to get along just fine, thank you. Those are the Detroiters that own their own houses, and has little trouble affording homes that are safe and comfortable.
It's the bottom half of the income scale that struggles to afford a decent place to live. And for those households ― tens of thousands of the poorest Detroit residents ― no easy solution presents itself.
Can we at least keep trying to find one?
John Gallagher was a reporter and columnist for the Free Press for 32 years prior to his retirement in 2019. His book, Rust Belt Reporter: A Memoir, was published last year by Wayne State University Press. Submit a letter to the editor at freep.com/letters, and we may publish it online and in print.
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This article originally appeared on Detroit Free Press: Detroit property values are rising ― and so are rents | Opinion