Tackling Southeast Michigan’s Biggest Housing Challenges
The narrative of southeast Michigan has long been driven by what happens in Detroit. As the city’s economy started declining in the mid-20th century, droves of middle- and upper-class residents fled to the suburbs while other families, particularly African Americans, who did not have the financial means to leave remained in a city that lacked adequate jobs, educational opportunities, and market investments. Detroit’s housing challenges—including vacant properties and declining homeownership—and its nascent rebound have captured most of the national spotlight.
But the next chapter of the region’s story will require local leaders and residents to think beyond the city-versus-suburbs mentality. Southeast Michigan’s housing future will depend on tackling a series of interconnected policy and market challenges within Detroit and across the inner-ring and outer-ring suburbs. And addressing those complexities will demand creative and collaborative solutions across sectors.
Like many of the area’s residents, Melanie Piana, a council member in Ferndale, a city north of Detroit, was underwater on her mortgage in the years following the housing crash. She watched her friends leave the region to find jobs in better markets, but she stayed because she loved the area she called home.
In 2016, Piana sold her house for slightly more than she originally paid and purchased a larger home near public transit that could also accommodate a parent who might come to live with her family in the next decade. “We’re primed to be living in the place where we want to be,” Piana said. “I’m an urban planner, and I’m planning ahead.”
The housing crash wasn’t just housing, it was jobs. We saw our friends move away to other places for jobs, and they had to get out from under their homes by short sale. They had to move. But we stuck it out. This is where our home and our family is.
Melanie Piana, Ferndale city council member
Piana’s forward-looking approach to caring for an aging parent illustrates one of the region’s distinct yet interrelated housing challenges: a growing senior population that needs accessible and sometimes smaller homes and access to effective transportation options. But Ferndale and the broader Southeast Michigan region do not have the housing supply to meet those needs for all residents and all income levels.
In addition to the growing number of seniors, Southeast Michigan is facing a decline in African American homeownership and a surge in demand for rental housing. These market changes bring new problems that could ripple throughout the region without local stakeholders making concerted efforts.
Southeast Michigan’s population has stabilized in recent years (after dropping between 2000 and 2010) and is expected to grow in all counties. The Michigan Department of Transportation's population estimates predict a more equal growth pattern in the region than in previous decades—growth that will put further stress on an already strained housing stock.
But these challenges are not unique to Michigan, nor is the misplaced city-versus-suburb narrative.
“Right now, every city is trying to do it on their own rather than take a regional approach,” Piana said. “Detroit can’t do it on its own and shoulder the burden. How can we do this better together?”
Why the region is “wholly unprepared” for its aging population
The increase in senior-headed households will significantly affect Southeast Michigan’s housing market and broader economy. This population shift brings several policy-related challenges, such as new transportation and housing needs, evolving health care demands, and income sources changing from wages to retirement assets.
Overall growth in the region will be driven by older households, rather than new residents. Southeast Michigan is expected to grow by 377,000 people between 2010 and 2040, but the number of senior households is expected to grow by 415,000. This means the number of nonsenior households is projected to drop by 38,000, and seniors’ share of the region’s households is forecast to rise from 22 to 37 percent.
“The rapid increase we’re going to see in our senior population compounded with the fact that we’re not attracting new residents at the rate of other states means we’re going to have a denser senior population than we could’ve anticipated. And we are wholly unprepared to provide housing and human services for those people living on fixed incomes,” said Conan Smith, a Washtenaw County commissioner. “It’s like we’re coming up on this massive waterfall and we’re about to go over the edge, but we’re still looking for the paddles in the boat.”
With the rising share of seniors comes changing housing needs. But Southeast Michigan’s housing stock is older than the national average, and older properties are more likely to require rehab and renovation and to have features like stairs that can be difficult for older residents to navigate.
For lower-income residents or people on fixed incomes, finding the money to perform those repairs—in addition to other renovations, such as grab-bars and no-step entries, to allow them to age in place—can be a challenge. Local governments are also facing dwindling government resources to fund home repair.
“Affordability is the number one problem for the seniors we work with, whether they’re aging in place or moving to a new home,” said Katie Wendel, advocacy specialist with the Area Agency on Aging 1-B. “It’s important that we offer seniors a range of living situation options. Our aging population is very diverse, and a one-size-fits-all solution won’t work.”
Rivertown offers a full continuum of care and integrated services for residents on site and in the surrounding community through a Program of All-Inclusive Care for the Elderly (PACE) as well as two Green Houses, a model that provides a more home-like setting than traditional nursing homes offer. PACE combines a range of health and other services on site and operates local transportation to and from the community. Rivertown is one of only four PACE sites currently in Southeast Michigan.
“Like a lot of urban areas, people’s access to health care throughout their life wasn’t adequate,” said Brian Carnaghi, senior vice president at Presbyterian Villages. “We wanted to address preventative measures with integrated care of the PACE program and the affordable assisted living and Green Houses by monitoring the residents’ health condition on a regular basis and keeping them from going to the nursing home and hospital.”
Building this kind of large-scale, affordable, and integrated complex wasn’t easy. It took years of planning, several health care and program collaborators, and multiple funding sources, including public, private, and philanthropic financing. But even with the creation of 150 on-site units and services for hundreds of area residents, the region is home to thousands more low-income seniors who need similar services—demand is booming.
You can’t create housing for people fast enough. There will continue to be demand. The Thome Rivertown is just one piece of a larger puzzle that needs to be put together.
Brian Carnaghi, senior vice president at Presbyterian Villages
Several policy approaches can help scale these types of housing solutions. More flexible zoning laws can allow for different residential uses, such as senior co-housing, mixed-use developments, or accessory dwelling units, also known as granny flats.
Policymakers can also examine ways to streamline development processes or amend building codes to optimize the development and maintenance of accessibility in homes throughout the community; such codes can limit minimum parking requirements that add to development costs or include accessibility standards and universal design. Further, expanding programs like PACE to link housing with services will help further satisfy demand.
“We need more development for seniors so they can stay in their community,” said Tahirih Ziegler, executive director of the Detroit Local Initiatives Support Corporation. “Instead of aging in place, this is aging in your community. You have all these relationships and businesses you frequent, and not being able to age within your community is detrimental to your quality of life.”
Combating the decline in African American homeownership
Detroit and the broader region were once a homeownership stronghold. But Michigan’s manufacturing industry downturn and the 2008 financial crisis devastated the market. Thousands of families lost their homes to foreclosures and were unable to find other affordable options.
This effect was particularly severe for African Americans in Michigan, whose homeownership rate tumbled from 51 percent in 2000 to 40 percent in 2016. Although the number of African American owner households increased in suburban Oakland and Macomb Counties between 2000 and 2016, the homeownership rate in those counties fell because the number of African American renter households increased at a faster rate than owners.
This disproportionate effect resulted from an array of economic and social challenges undermining African Americans’ wealth. “The black homeownership issue has its roots in concentrations of poverty, in land-use decisionmaking, and in economic justice decisionmaking happening at the state and regional level for decades,” Smith said. “The impoverishment of our black community in Southeast Michigan was not accidental. It was the result of definitive economic policy.”
Urban Institute researchers identified two major issues that threaten to exacerbate the problem across Southeast Michigan: tax foreclosures and predatory land contracts.
Tax foreclosures surged in Detroit after the financial crisis, which led to the city having one of the highest tax foreclosure rates in the nation. That surge was driven by several factors, including previous overassessments of property values, residents’ limited awareness of exemptions, and high poverty rates. In 2015, the city’s property tax foreclosure rate was 3,949 properties per 100,000 people, compared with 52 per 100,000 for New York City and 197 per 100,000 in St. Louis County, Missouri.
Legislators changed the law in 2014 to significantly reduce interest payments and help owners set up payment plans, resulting in a steep drop in foreclosures after 2015. The city also began a reassessment process in 2014 that reduced property tax payments for about 55 percent of residential property owners. Although Detroit made progress in addressing the foreclosure crisis, the city still foreclosed on 2,980 occupied homes in 2017.
In 2015, Detroit's property tax foreclosure rate was 3,949 properties per 100,000 people, compared with 52 per 100,000 for New York City and 197 per 100,000 in St. Louis County, Missouri.
This problem also affects the surrounding suburbs, which saw an influx of African American residents in recent years. Wayne County (home to Detroit) still has the largest share of African American households in the state, but that share fell from 62 percent in 2000 to 51 percent in 2015. In Pontiac, a majority–African American community of about 60,000 residents 18 miles north of downtown Detroit in Oakland County, tax foreclosures rose between 2015 and 2016. Despite accounting for only 5 percent of Oakland County’s population, Pontiac accounted for 57 percent of tax foreclosures in the county in 2016.
To tackle this issue, local volunteers and organizations in Detroit are helping owners and renters facing foreclosure avoid losing their homes. One large-scale effort involved Quicken Loans Community Investment Fund partnering with United Community Housing Coalition to go door-to-door to 3,300 residents in Detroit facing tax foreclosure. This effort to educate residents about underused property tax exemptions and options to reduce their payments offers a model that could expand to other communities in Southeast Michigan.
After its initial success, the organization launched the Neighbor to Neighbor program in October 2017. By March 31, 2018, volunteers with the program reached all 60,000 Detroit residential properties that were behind on their property taxes.
My neighborhood has been directly impacted by tax foreclosure. When we talk to clients about taxes, a lot of times they have no idea these programs exist. You’re looking at homes that have been in families for generations that are lost to foreclosure. If you deal with the tax issues for this year, that’s a small victory you can build off of. That may lead to a domino effect where you can start to get your entire affairs in order.
William Hatcher, senior client advocate at Quicken Loans
“There was a clear education gap. People didn’t know this property tax exemption existed, they didn’t know how to apply, and they didn’t know they had to reapply every year,” said Laura Grannemann, vice president of strategic investments for Quicken Loans Community Investment Fund. “We realized that if we can’t effectively communicate, we need to start going to individual communities and get this information in front of residents.”
The growing prevalence of land contracts is another threat to homeownership in the region. In these arrangements, the seller of the property finances the sale directly to the buyer, who then pays the purchase price in installments over time instead of using a traditional mortgage. Although land contracts aren’t inherently predatory, the lack of legal protections can leave buyers at risk of payment obligations that wouldn’t happen through a traditional mortgage.
These arrangements were common among African Americans homebuyers from the 1930s to 1960s, when federal homeownership programs excluded most African Americans from the traditional mortgage market and real estate agents used land contracts as an alternative. In 2009, African Americans held 40 percent of the Detroit metropolitan area’s 22,500 land contracts, but they accounted for only 15 percent of the region’s homeowners.
After the 2008 financial crisis, land contracts had a resurgence in communities devastated by mortgage foreclosures because of predatory lending activity. In 2009, African Americans held 40 percent of the Detroit metropolitan area’s 22,500 land contracts, but they accounted for only 15 percent of the region’s homeowners. In 2015, the Detroit News found that more land contracts than traditional mortgages had been filed with the Wayne County Register of Deeds in Detroit. Because there is no legal requirement for sellers to file land contracts with the county, the actual number of land contracts is likely higher than recorded.
In 2009, African Americans held 40 percent of the Detroit metropolitan area’s 22,500 land contracts, but they accounted for only 15 percent of the region’s homeowners.
Solutions to this growing problem include introducing legal standards for land-contract agreements, offering increased eviction protections, ensuring that all land contracts are registered with state or county government, and requiring third-party appraisals and independent inspections.
In addition to preventing further homeownership losses from foreclosures and land contracts, approaches to revive African American homeownership need to help renters become owners, support established owners, and invest in predominantly African American neighborhoods.
“Now is a really good and important time to be a property holder in Detroit. If we empower residents to be sustainable homeowners, then we will all be better off because they will be beneficiaries of that growth,” Grannemann said. “We are a city with a history of homeownership, and it’s important to empower residents to build equity.”
Facing a wave of renters in a region rooted in homeownership
The decline in African American homeownership and the rise in the senior population are two of many factors contributing to another housing challenge in the region: the shift from owning to renting. In fact, the city of Detroit is now home to more renters than owners.
As residents’ preferences change and the share of renters grows, “we have to come up with a multitude of products that aren’t just single-family homes,” Ziegler said.
Although the Southeast Michigan region has a 70 percent homeownership rate, the share of renting households is expected to rise in the coming years. Across the nation, Americans are waiting longer to become homeowners, and many people who lost homes in the foreclosure crisis are still renting.
Like many US regions, Southeast Michigan wasn’t prepared for the shift, and it’s now facing a shortage of apartments and other rental units after decades of focusing on single-family construction. That shortage of available units—because of a lack of new development as well as the loss of subsidized affordable units and the abandonment of blighted properties—has led to higher rental prices and competition among low- and higher-income residents for the same units.
The shortage of affordable units extends beyond the city limits. Accounting for subsidies, Detroit has 46 units that extremely low–income households can afford for every 100 extremely low–income households in the city. But at the county level, Wayne County actually has a higher proportion of affordable units than the surrounding Macomb, Oakland, and Washtenaw counties.
Building new affordable housing can mean dealing with the stigma and NIMBYism of some residents who oppose affordable housing complexes in their neighborhoods. Community Housing Network (CHN) is working to combat that stigma and integrate their developments into the surrounding community.
One of CHN’s projects, Unity Park Rentals, is a single-family home development in Pontiac. CHN aims to stabilize the neighborhood (where home values and investment plummeted after the foreclosure crisis), promote homeownership, rebuild a strong lending environment, and help Pontiac’s tax base.
CHN used scattered-site tax credit allocation, combining multiple subsidies to build homes under a 15-year lease-to-purchase structure, meaning renters can “buy in” to the neighborhood with the option to later buy their homes. This rent-to-own model allows renters to contribute to the stabilization of the neighborhood and benefit from its future growth.
Through a combination of federal neighborhood improvement programs, city support, bank grants, local companies, and other local agencies, CHN secured funding to help rehab other homes in the surrounding community as well as revamp a basketball court in the nearby Shirley & Willard Park.
“It was a true community effort. We’re constantly looking at how can we reach out and listen to the community and find out what they need,” said Kirsten Elliott, vice president development for CHN. “A huge barrier to having affordable housing is the public perception of what affordable housing is. How do we change that narrative? A big way is to forge those connections with the community so they know someone who lives in that affordable housing neighborhood.”
Subsidies are necessary for many low-income households to be able to afford their rents. But the sources of these subsidies are under stress, as public housing agencies have limited funding and federal assistance is flat or declining. Forty-two subsidized agreements in developments with 3,703 affordable units are set to expire in the region by 2028, and though many of these contracts will be renewed, developers could be pressured to end subsidies in stronger submarkets.
I wanted to make it my mission to build something that would allow the community to come together as one. Because of the basketball courts’ upgrades and the fact that they’re safe for kids, a lot of individuals will come from the west side of Pontiac and use that park. They’re able to get outside and just be kids and not miss out on that component of childhood.
Jarrett Sanders, outreach coordinator at Unity Park Rentals
But private developers that want to build affordable housing still face the challenge of meeting their financial goals and making the project pencil out. To encourage developers to build affordable units, some municipalities are expediting review processes and reducing regulatory requirements for projects that include affordable housing.
And cities like Ferndale are adopting inclusive planning policies that require developers seeking tax incentives or purchasing properties from the city to build 25 or more units to reserve 25 percent for affordable housing.
“If you want to make sure the people who work in your community can live there and have affordable rents, then we need to make sure we’re being intentional with our policies,” said Piana, the Ferndale council member.
Shared housing challenges require collaborative solutions across sectors
These housing challenges may have different root causes, but solving them will require collaborative approaches that involve public, private, nonprofit, and philanthropic stakeholders from across the region to gather and share data along with the results of successful programs.
For example, assisting stakeholders in accessing and understanding data from the Michigan State Housing Development Authority (MSHDA), the Southeast Michigan Council of Governments (SEMCOG), and other sources will help them better tackle challenges affecting their communities. MSDHA and SEMCOG are important resources in efforts to bring people from across the region together to work on policies to solve these housing challenges.
The city and the suburbs can learn from each other as they combat similar issues, which are only going to become more pressing in the coming years. “These three issue areas are not exclusive to any one community in the metro area,” Smith said. “They’re all of our challenges.”
DESIGN: Christina Baird
DEVELOPMENT: Jerry Ta
EDITING: Elizabeth Forney
PHOTOGRAPHY: Ali Lapetina
PHOTO EDITING: Maura Friedman
WRITING: Emily Peiffer