For all the talk about gentrification, much of Detroit is still reeling from a housing crisis that decimates neighborhoods and displaces residents.
That’s the grim conclusion of Eric Seymour, a Brown University post-doctorate researcher who has extensively studied Detroit’s neighborhoods. While most think of the 2007 mortgage crisis in
past tense, Seymour argues it’s still unfolding.
Seymour describes a multi-act tragedy that saw more than a third of city homes go into foreclosure, transforming Detroit from one of the leading cities for black homeownership to being a majority of renters and topping the nation in eviction rates (more than 30,000 per year.)
The dominoes fell like this, Seymour argued: First, Detroit was targeted for subprime mortgage refinances. When homes foreclosed, they were sold for cheap to investors who didn’t pay taxes. Then the homes were tax foreclosed by Wayne County to less scrupulous buyers who either sold them on land contracts or converted them to rentals. In the process, many of the homes have become unlivable, but when renters withhold payment for repairs, they are evicted, Seymour said.
And yet, a majority of tax subsidies go downtown.
Bridge Magazine recently talked to Seymour, who wrote papers for the University of Michigan about how land contracts have hampered Detroit neighborhoods. He’s now studying evictions, foreclosures and water shutoffs for Brown. The conversation was edited for length and clarity.
Bridge: Is traditional gentrification occurring in Detroit?
Eric Seymour: I will cautiously say it’s limited. There are far more neighborhoods that are declining than are gentrifying. There are some instances where properties are being converted to market rates and folks being pushed out. But I’m looking at the neighborhoods, where displacement is occurring without gentrification and how city and county policies and market forces have exacerbated displacement outside downtown.
Detroit is a few years removed from bankruptcy with limited resources. Are they being directed to one area at the expense of others?
It’s hard not to see it that way. Someone like Dan Gilbert, who has already sunk so much capital into the city, wouldn’t continue to develop unless he finds it profitable. There’s been a lot of research that shows (tax) subsidies are really giveaways because developers would spend the money anyway. So that money could be spread out evenly to other areas of Detroit.
There’s money coming to Detroit precisely because it’s profitable. It’s not because of these tax breaks. That’s just a way for corporations to hold cities hostage to get more concessions.
What are you seeing at the neighborhood level?
Predatory actors have been able to accumulate large numbers of properties with inventory and extract more money from neighborhoods using land contracts or through being predatory landlords.
In neighborhoods, there were large number of subprime mortgage refinances. Almost all of those properties were repossessed, and then Fannie Mae and Freddie Mac, Wells Fargo and Bank of America sold those properties in bulk to investors. They got rid of the ones they could through land contracts and the ones they couldn’t, they just let go into tax foreclosure.
Does the city or county have policies to address these issues?
The city and the county should have acted to keep these properties out of the hands of these predatory landlords. They could do more things related to code enforcement or rental registries. But in short, no, the city and county really haven’t done anything.
Neighborhoods were set on a path by the mortgage foreclosure crisis. But instead of being helped out with interventions to stabilize them, they’re being pushed off the cliff.
In fairness, it wasn’t just neighborhoods that were collapsing during the housing crisis. City Hall was too, with the resignation of Kwame Kilpatrick and then bankruptcy. Are you expecting too much?
I don’t blame the city alone. The city, the county, the state, the federal government, and lending institutions all interacted together.
We’re feeling the aftershocks. The federal government, Fannie Mae and Freddie Mac, should not have been selling properties for pennies on the dollar to anonymous, dark moneyed speculators. The federal government downloaded responsibilities to cities like Detroit that are already greatly distressed, in large part because of subprime loans created by deregulation from the federal government.
That’s not a city problem, per se. The city could have raised more of a stink about it. Some cities sued subprime lenders. Detroit didn’t do a lot about (But) it’s hard to say it’s just the city’s fault.
Are more neighborhoods doing poorly than well?
The neighborhoods that hung on are the winners now. The ones you’d expect: The Villages, Grandmont Rosedale, Marygrove-Fitzgerald.
A lot of those folks had to do it themselves. They could only do it because they had the resources, but there are many more that weren’t able to band together and pull themselves up from the bootstraps. (Elsewhere) there is a churn of poor people in Detroit getting pushed out of their homes, moving from one stable neighborhood to a less-stable one because their credit is hit or they were evicted.
We’re a decade from the mortgage meltdown. Isn’t there hope the city is emerging?
There’s a lot of folks in dire straits and struggling. The county has made some strides in tax foreclosures (which are down more than 75 percent in Detroit in the past two years.) The city has put some more pressure on landlords (through a recent rental ordinance designed to get all properties up to code within two years.)
It’s hard for me not to be cynical or skeptical. A lot of damage has occurred, but there’s a lot the city could do if they wanted to. You could make the case that the city should provide free legal counsel to tenants facing eviction, especially when you have these investors who bought the homes who aren’t keeping up to code. A lot of these properties more likely than not will become tax foreclosures later, so intervening robustly would help.
You’re not providing us with a lot of holiday cheer.
There’s a lot of folks who are going to have a pretty stressful Christmas.