Four years ago, while on a return trip from South America to my home in Detroit, a pleasant, middle-aged Argentinian man sparked up a conversation with me and my travel companions while we waited in line to enter the boarding gate. He told us he planned to meet with investors looking to purchase residential investment property in Detroit. Though the conversation was pleasant, after boarding the plane, I could not shake the feeling that his reason for visiting could contribute to the undoing of my relative stability as a homeowner in the city.
This chance encounter was an ominous reminder of a trend that has taken hold in recent years – investment property purchases by entrepreneurs looking to capitalize on a combination of the city’s revitalization efforts, ample and relatively low-cost housing stock and the difficulties local residents face in obtaining mortgages to purchase their own homes.
In a 2016 series “Examining Borders that Define Detroit,” Model D, a weekly Detroit online news magazine, featured my west side neighborhood, Aviation Subdivision. Although its origins are somewhat unclear, according to an archivist with the Dearborn Historical Museum, the property was previously known as Morrow Airfield and used by Henry Ford through WWI. In the early 1920s it was acquired and developed by real estate developer Robert Oakman. The housing stock in this area includes a variety of tudors, colonials, bungalows, and ranches that range in size from 1,000 to 4,000 square feet. Despite not experiencing sharp property value increases in the nearly 10 years since this article was written, it remains stable with low crime rates and minimal blight.
While my neighborhood retains its quiet strength with its tree-lined streets and neat rows of brick homes, the signs of change are beginning to reveal themselves as our elders, once its backbone, begin to transition. Slowly, as if the universe understands that gradual change is less jarring and easier to negotiate, one home after another was left to be cared for by adjoining neighbors until word got out that a house was out of probate and on the market. Unfortunately, affordable homeownership is practically out of reach for many, with the market now favoring investor groups. Speculative investment purchases have increased, particularly after the Great Recession, when Detroit’s abundant, inexpensive housing supply began to attract the attention of entrepreneurs as a profit source.
Today, companies like U.S.Investor Group are advertising on their websites “handpicked properties in the best neighborhoods” that can generate profitable rental income and long-term appreciation for investors. While this type of commercial investment can be considered progress for struggling cities such as Detroit, ironically, it could also lead to the undoing of long-standing neighborhoods such as mine. These sites attract investors to buy houses by highlighting the stability of certain neighborhoods; however, commercial investments of this nature can undermine the very stability and strength that was built over many years by those who had deep roots in these communities and a commitment to their well-being.
Nineteen years ago, I purchased a house that a group of residents had taken care of for two years following the passing of their beloved neighbor and friend. These residents were committed to fostering community and building relationships. They organized monthly block club meetings and worked tirelessly to maintain their homes and care for each other. Their commitment inspires many of us who continue the work, except instead of battling normal wear and tear, we are also fighting to address blight, difficulties in mortgage accessibility and saving our neighborhood from investors, most of whom have no roots here.
Detroit is a city that had a significant impact on the world, particularly in terms of industrial innovation, music, urban style, and a solid determination to overcome challenges even after more than half of its population left. These days, the city is gaining attention for its efforts to revitalize amid a nationwide housing crisis and renewed interest in long-neglected urban centers.
In 2023, the San Francisco Bay Area Planning and Urban Research Association SPUR published an essay that examined multiple innovative programs developed in the city of Detroit to address housing insecurity through community-based intervention combined with public, philanthropic and corporate investment. One such program, The Strategic Neighborhood Fund (SNF), has drawn particular attention nationally. Launched in 2014 and directed at three neighborhoods in the city with $42 million in funding, it was later expanded to include 7 additional neighborhoods with $130 million in further funding. It has leveraged many more millions of dollars in investment towards increasing affordable housing, neighborhood stabilization initiatives and infrastructure development in the 10 targeted areas. The SPUR report concluded that infrastructure improvement and community engagement such as those encompassed by SNF are key to urban revitalization.
Moreover, an article by HUD’s Office of Policy and Development and Research reported on a 2021 panel discussion conducted by officials from the City of Detroit’s Planning and Development Department at a national planning conference. Urban planner David Penniman reviewed the “legacy of racism in the urban development of Detroit” showing how “despite challenges, such as red-lining, racial terrorism, disinvestment, and highway building through African-American neighborhoods, progress in the second half of the 20th Century helped build a significant African-American middle class in Detroit, only for those residents to see significant losses of wealth during the recession of 2007 to 2009, including foreclosure on 130,000 Detroit homes.” From this low point, the city initiated innovative public-private programs, including the NSF, which have been successful at ameliorating the city’s extreme housing inequities. Foremost of the lessons to be learned by urban planners and policymakers from the Detroit experience is “the need to make space for community members to articulate which resources are best applied to a neighborhood’s particular needs and the importance of following through on those commitments.”
Detroit has a tremendous opportunity to lead revitalization efforts that consider the needs of all its citizens by changing policies that have proven detrimental to people with modest incomes and people of color. As per the 2022 U.S. Census Report, the average median income of Detroit residents is around $37,000. These statistics suggest that it is essential to prioritize affordable homeownership for the working-class poor and modest-income families, as, according to a 2023 article by MLive, Detroit now has more renters than homeowners.
If neighborhoods like mine are to survive, it is imperative that the city continues to devise creative and constructive solutions, not only geared towards infrastructural development and blight reduction but also to make affordable housing stock in neighborhoods like Aviation Subdivision more accessible and control predatory investment practices. With the older generation transitioning out of their homes, our neighborhood could either become a stable place to obtain affordable mortgages or it could turn into an area filled with homes that are inadequately maintained by property management companies with little stake or interest in the community. Fortunately, recent advocacy and impetus for better access to small-dollar mortgages offer cause for hope.
A recent study conducted by Detroit Future City highlights the need for improved access to homeownership for individuals earning $50,000 or less. This is a realistic and achievable goal, especially considering the ongoing efforts to address past injustices to African-Americans in the city. In the past, many individuals with modest incomes could not obtain mortgages due to the “low profitability to lending institutions, high fixed costs, lending regulations, and appraisal gaps.” Among the practical solutions: Encouraging local lenders to dismantle policy impediments that inhibit mortgage approvals for lower-value homes and increase public awareness of those existing loan products designed to meet the need of modest-income homebuyers. However, to ensure better access to affordable housing, simultaneous efforts must be made to minimize the influence of investors who squeeze out potential homebuyers.
With this, if Detroit is to continue influencing the nation in urban revitalization, better efforts must be made to clear the way for more equitable homeownership in stable, high-occupancy neighborhoods such as mine. Moreover, for such neighborhoods to remain desirable to families in the housing market, the city must do more to discourage predatory investments, remedy blight through education and enforcement of its ordinances equally, and expand public-private neighborhood development programs such as the NSF. Lastly, community engagement is an essential ingredient that must be included in the conversation, as no one can advocate for one’s neighborhood better than those who live there. While constructive criticism and advocacy for change certainly have their important role, building and maintaining safe and productive neighborhoods, in the end, requires the blood, sweat and tears of those who live there and a commitment from local officials elected to serve their interests.
Dorothea Williams-Arnold is a 17-year veteran of Detroit Public Schools Community District. She is a senior fellow at the Pulse Institute, president of her community block club and leads a neighborhood-wide effort to address blight.
