Real Estate experts at the national level are asking the question: Is the Detroit Housing market on the brink of a crisis?
According to Forbes Magazine, the number of homes underwater in the city of Detroit has increased 1.6 percent over the last year to 4,963 homes.
Some at the national level raised the question: Is this the start of a new trend?
Local real estate insiders say they are not worried.
“Even over the last 30 days there has been an incline in value, a decline in days on market and inventory has gone down,” said Larry Else, of Downtown Realty.
Else says in his business he is seeing the value of single-family homes continue to increase and offer families more equity.
Detroit real estate experts say the one place they are seeing sales slow is in condos in older neighborhood enhancement zones.
These are neighborhoods where the city offered temporary property tax breaks for a time period to encourage development.
Those discounts are expiring, and homes that have increased in value are seeing much higher taxes.
“What’s happening now in Downtown and Midtown is that, as those expire, we are seeing people see the taxes are changing on my property and it leads to decisions,” said Arthur Jemison, Detroit Housing Director.
Jemison says the city is looking at ways to make sure that expiring tax breaks don’t result in anyone leaving the city.
“Tax rates that were in place, originally, need to be evaluated. And the new rates need to be evaluated. Maybe there is a phase or incremental transition from the old tax rate to the new one. This is the kind of policy we want to address in the next six months,” he said.
“It is simply staggering,” said Steven Calkins.
Steven Calkins and his wife moved to a condo in the Canfield Lofts in Detroit’s midtown because they wanted to be part of the city’s comeback.
Some condos for sale there are sitting on the market for months.
He says his taxes are about tenfold what taxes used to be for a condo there and says he believes the end of tax discounts is temporarily impacting sales.
“The nominal rate in Detroit isn’t real. It is an artificial rate, and everybody gets a deal. It is not a long-term way to run a city,” said Calkins.
City leaders say most of the people impacted by expiring tax breaks are seeing higher than expected tax rates because they made a good investment by buying in Detroit.
Their property values may have increased more than expected. They are not overall struggling.
The city says if people are struggling to pay taxes due to poverty they can apply for assistance.
The city estimates future property values to predict tax income. It predicts continued growth.
"What we are seeing is a continued strengthening of markets in the city," said Arthur Jemison, Detroit Housing Director.
