The Eviction Machine: Neighborhood Instability and Blight in Detroit’s Neighborhoods

July 16, 2019

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June 2019

Joshua Akers, University of Michigan-Dearborn, and Eric Seymour, Rutgers University

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Abstract

The mortgage and financial crisis of the past decade reshaped low income housing markets in Detroit. The twin waves of mortgage and tax foreclosure reconfigured ownership patterns in the city as bulk buyers and speculative investors purchased large volumes of residential property. This transition has led to instability and blight in many of Detroit’s neighborhoods. Home buyers and tenants are forced to navigate a housing market of marginal choice. Limited access to credit and mortgage markets often places these homebuyers at the whims of sellers offering land contracts with predatory terms and that often end in eviction. The public system of tax foreclosure serves as a pipeline for bulk buyers seeking new properties to market to residents in need of shelter. The lack of upkeep and care often result in these properties returning to public ownership where the government assumes the cost of demolition. This report is a compilation of our work over the past five years examining what becomes of housing following foreclosure as it moves between banks, private investors, and government inventories and the impact of this process on tenants and residents. Though much of the information in this report is bleak, there are points early in the process where public agencies control these properties, and they could therefore limit the growth of this problematic sub-market. In addition, many of the issues faced by low-income tenants and homebuyers could be redressed by existing policies if they were enforced.

Key Findings:

  • Pipeline: 90% of all tax auction purchases have been to investors, principally bulk buyers, since the Wayne County tax foreclosure auction began in 2002.
  • Eviction: 60% of properties purchased by the top 20 tax auction buyers experienced two or more subsequent evictions.
  • Demolition: We estimate $34 million was spent by the City of Detroit, starting in 2014, demolishing houses purchased by speculators in tax foreclosure.

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