This story was first published by Aaron Mondry of Outlier Media. WXYZ is a proud partner of Outlier Media.
Related: Dennis Kefallinos: Detroit’s most notorious speculator
Property speculators have wreaked havoc on Detroit over the last decade. Some of the effects are easy to see: blighted properties that fall apart bit by bit for years. Some are easy to feel: historic buildings that sit vacant. Others are easy to measure, like lost tax revenue and publicly funded demolitions on a scale unrivaled anywhere else in the country.
Property speculation was easiest in the years following the housing market collapse, when Wayne County was auctioning off thousands of tax-foreclosed properties a year for very low prices. Property values have shot up in the last few years, as well as the cost of buying at the tax auction, and some of those who bought property when it was cheap might be ready to sell.
But does simply trying to profit off buying and selling property in the city make somebody a speculator?
What is a property speculator?
Speculators anticipate development hotspots and buy up property ahead of a boom.
Once they’ve acquired a property, they typically avoid any further investment or upkeep. Not because they can’t, but because they choose not to. Roofs collapse, thieves strip items of value, property taxes go unpaid.
Speculators can be easy to spot in public records: Many of the same owners’ properties show up repeatedly in the city’s blight ticket database or the Wayne County tax auction — like Matthew Tatarian, who owns hundreds of properties in Detroit. He’s racked up 491 blight tickets since 2005, and the city sued him in 2016 for more than $116,000 in unpaid taxes. Or “blight king” Ernest Karr, who at one point owed more than $1.1 million in tickets to the city.
Property owners who ignore their investments don’t need big portfolios to cause trouble in a neighborhood. But for this series, we’re taking the lead of Property Praxis, a research project that catalogs speculation in Detroit and a partner in our reporting. They define speculators as owners with at least 10 properties.
Speculators control an enormous share of Detroit’s real estate: Around 20% of properties since the early 2010s, according to experts.
Eric Seymour, an assistant professor at Rutgers University who studies Detroit speculation, said that percentage is very high among U.S. cities.
“Speculation is often correlated with historical processes like racial disinvestment and segregation,” he said. “Detroit is such a highly segregated, racialized place, which is one reason why there’s so much of it.”
In the coming weeks and months, Outlier Media will publish a series of stories on speculators and their impact on Detroit. We’ll examine how they hide their identities, their business models, how their portfolios have changed over time and their impact on neighborhoods — starting with a profile of Dennis Kefallinos.
This article first appeared on Outlier Media and is republished here under a Creative Commons license.
