News

Detroit Proposes Discount For Auction Homes, Struggles With Mortgages

January 26, 2015

Detroit officials are proposing to give current and retired city workers 50 percent off of the price of a home bought at a Land Bank auction.

It’s a new variation on an idea Detroit officials have put forward since the state abolished residency requirements in 1999.

City workers, their immediate families, parents, siblings and even legal guardians will get half off of a winning bid for a home up for auction if the buyer keeps the home for more than three years.

If they sell it before then they must give a portion of the profits back to the Detroit Land Bank.

The plan must still be approved by the City Council.

Sales of some of the homes being auctioned have reportedly slowed.

But Detroit Mayor Mike Duggan says the city will soon sell a new batch of better-quality homes.

“And starting mid-March, going forward, we are gonna have a very strong group of properties up for sale,” Duggan said. “Those of you that follow this know there’ll be one day we’ll sell a house for $47,000 in East English Village. And then the next four or five might go for $1,000 because they’re in neighborhoods that need far more work.”

Duggan adds that many homebuyers in Detroit have had trouble securing mortgages.

He says that’s partly because property values have rebounded far more quickly in Detroit’s suburbs than in the city itself.

Duggan says only about one out of every 10 home buyers in Detroit last year could actually secure a mortgage.

He said, “It’s an odd situation and when the President was here I showed him two houses – one four blocks south of 8 mile and one four blocks north of 8 mile. And this beautiful brick home that sold for $36,000 in Detroit could not get a mortgage. And yet you had a smaller, older wood frame house in Ferndale that got a mortgage for twice as much money.”

Duggan says he will meet with the US Treasury Secretary next week to press for a federal solution to the mortgage quandary.