Detroit Housing Counseling and Homeownership Project
The project: The goals of this project are to better understand the state of first-time homebuyer education in Detroit and to analyze public data sources that represent the state of sales and homeownership in Detroit. Another aim is to assemble funders, public institutions, and the 16 HUD-certified housing counseling agencies in Detroit to identify best practices that make housing counseling and finance available to people who need it. The partnership established through this project can serve as a collaborative model between community organizations, real estate professionals, and the University of Michigan for addressing the homebuying process, including identifying education gaps and potential wraparound services that anticipate challenges for first-time homebuyers.
The process: To better understand available home financing and the outcomes of HUD-certified homebuyer education programs, the research team has reviewed data on the demographics of people who have completed homeownership education through 14 of Detroit’s 16 HUD-certified housing counseling agencies and data on property sales and mortgages in the city. Researchers also fielded a survey of more than 200 people who have taken homebuyer education to learn more about their experiences.
Using this data, the research team delivered a report on the state of homeownership and housing counseling in Detroit and presented their findings at a public convening in November 2021, featuring U.S. Rep. Rashida Tliab as a keynote speaker.
Results: The research revealed considerable and consistent demand for single-family housing in Detroit through participation in pre-purchase housing counseling. However, this demand is not translating into either greater mortgage availability or home purchase success. Based on these findings, the research team made the following recommendations to make homeownership more achievable for Detroit residents:
- Equity by geography: Data from 2015 to 2019 show areas of demarcation, where housing finance works and buyers have access to credit to buy homes, and areas where homes are bought and sold almost entirely through cash. Any opportunities to improve homeownership in the city must attend to these areas of demarcation. Achieving equity by geography will require greater coordination to make them available first to Detroiters with low to moderate incomes, particularly of homes targeted for stabilization through Prop N.
- Alternative financing mechanisms: Pre-purchase housing counseling is often a requirement for mortgage approval, but this financial product is not working for most of the participants in these programs, nor for large swaths of the Detroit housing market. The volume of individuals completing housing counseling suggests there are thousands of Detroiters who are credit-worthy for conventional mortgages. Lenders would position themselves well if they could offer a product that graduates of housing counseling programs would be eligible for, and would help them purchase a home.
Trina Shanks, U-M School of Social Work
Hector Hernandez, Southwest Economic Solutions
David Palmer, DC Palmer LLC