Approved mortgages double in Detroit in 2018

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- In the past three years, the number of approved home mortgages in Detroit has doubled with a program that helps prospective buyers when their homes don't appraise.
One of those home buyers is Tina Sykes. The Detroit native moved away but wanted to come home and she wanted to buy her own place. In March 2018, she applied for a Federal Housing Administration [[FHA) loan but it hit a roadblock, a common one in Detroit.

"Found out that the driveway was not going to pass for an FHA loan so we had to get that done for it to be mortgage ready," Sykes said...

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Keep reading here:

http://www.fox2detroit.com/news/loca...etroit-in-2018

I have mixed feelings about this program. On one hand it's great to see Detroiters moving from renting to homeownership, on the other approving mortgages on homes that appraise for less than the selling price seems like a risky way of going about it. Yes these people are now homeowners, but they're automatically facing a situation where they are immediately [[And likely substantially) underwater. That works as long as values continue to rise, but that's not a given. Also the additional loans being offered for needed renovations prior to purchase appear to be vaguely similar to the down payment loans that were popular prior to the real estate meltdown.

That's all fine and well. However, you might get a good deal on a house with the bank's assistance, it's other factors that make it more expensive to move there, like higher car insurance, higher crime, poor schools if you have school age kids, etc.. that doesn't make it such a great move after all. Buying a home just for the sake of buying one, isn't feasible if you can't profit from it financially, mentally or just having a daily peace of mind with your environment in which you live.

Who is buying just for the sake of buying? You're not making sense. I'd say many people have a daily piece of mind living in the city, otherwise, they wouldn't buy.

Leave it to this place to spin another solid positive into a negative.

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Originally Posted by Cincinnati_Kid

That's all fine and well. However, you might get a good deal on a house with the bank's assistance, it's other factors that make it more expensive to move there, like higher car insurance, higher crime, poor schools if you have school age kids, etc.. that doesn't make it such a great move after all. Buying a home just for the sake of buying one, isn't feasible if you can't profit from it financially, mentally or just having a daily peace of mind with your environment in which you live.

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There is a big difference in learning from the past or being paralyzed from it. Lending requirements are far tougher than the mid 2000s. People have to have credit ratings and income to secure the loans relevant to that income.

A “cash only” real estate market doesn’t exist and function successfully anywhere else in the United States. Why would someone expect Detroit to be the exception? Expecting it to operate that way indefinitely would be nothing more than rubbing Detroiters face in it for past failures in the housing market.

Just because you speculate on something , with someone else's money,
doesn't mean the risk is gone for either party in the charade.

Detroit hits mortgage milestone as housing market gains momentum

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For the past decade, it’s been almost impossible for aspiring Detroit homebuyers to get mortgages.

But that appears to be changing. The city notched a real estate milestone of sorts last year, recording more than 1,000 new home mortgages in 2018.
That’s according to the Detroit Land Bank Authority. Its data show that 1,221 homebuyers purchased homes with traditional mortgages last year.

Linn says another good sign is that mortgage-backed homebuying is spreading to more neighborhoods.

“When we first started looking at this, mortgages were really more or less tightly confined to the city’s most elite, strongest housing market,” he said. “I think over time, we’ve seen more and more neighborhoods sort of added to that group, it’s becoming much more sort of a widespread geographic distribution.”

Land bank data show that home sales prices are on the rise, too—jumping from around $33,000 in 2014 to more than $74,000 in 2018.

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http://www.michiganradio.org/post/de...gains-momentum

I think both of the following are true.

The availability of conventional mortgages in the city is a substantial advance toward normality.

Just because mortgages are available doesn't mean you should buy a house.

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Originally Posted by Worldsgreatest

Who is buying just for the sake of buying? You're not making sense. I'd say many people have a daily piece of mind living in the city, otherwise, they wouldn't buy.

Leave it to this place to spin another solid positive into a negative.

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Are you serious? A lot of people buy houses because society tells them they have to, or it's the right thing to do. Some people DON"T necessarily NEED a house. That's the point I'm making, and the post above this one, and post #2 reflects what I'm saying. And higher rates on car insurance isn't a negative? Increased crime [[mainly break-ins and car thefts) and bad schools isn't a negative? Cheaper housing costs doesn't negate the increased costs in other areas, so it's basically a wash. Not being negative towards Detroit, just being real.

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Originally Posted by Cincinnati_Kid

Are you serious?

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FWIW, before you engage, that particular poster [[and one other that hasn't made an appearance *yet*, both of whom seem to have joined within the past year) is triggered by any comments they perceive to be negative about Detroit, even if factual.

They never seem interested in having an open dialogue with respect to perfectly valid criticisms of the city, and when you ask them to back up some of their absurd claims [[which are transparent attempts to overhype Detroit's "comeback") with evidence, they go MIA.

Just check their post history and see for yourself.

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Originally Posted by O3H

Just because you speculate on something , with someone else's money,
doesn't mean the risk is gone for either party in the charade.

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If you purchase within your income and wealth, it could also be called investment. Calling it 'speculation' feels like an attempt to spin this negatively.

Most wealth is created by using other people's money. [[Once created, you then become the speculator who lets others use your capital to create value for you and for them.). Only if the lending is done in bad faith is it harmful.

But kinda agreeing with the post, I think the blind pursuit of home ownership [[as a social policy) is a mistake. It is a fine goal, but it should be the product of other good financial management, not an end unto itself.

I am glad to see that bankers are starting to support 'speculation' in Detroit real estate again. I hope that its used wisely and not selfishly as pre-2008.

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Originally Posted by Johnnny5

Yes these people are now homeowners, but they're automatically facing a situation where they are immediately [[And likely substantially) underwater.

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I understand your concerns, but in Detroit this isn't necessarily true. The housing market is so unusual and skewed that a good or accurate appraisal is often hard to come by.

Really, the appraisal isn't the determination of the value of the property but what people are willing to pay for it.

When I lived in EEV, for example, property values were always higher - rightfully so - than MorningSide, even during the crash. Then enter some barely literate appraiser from Clinton Township, who would pull comps for a Kensington Road house from Three Mile Drive and Buckingham. The deal would fall through because they pulled their comps from the ghetto because they think it is all the same. Of course you can repeat that throughout the city. I wonder how many people from West Village, Woodbridge, Rosedale Park have gotten fucked that way.

What bothers me is that FHA is still making a fuss over things that don't matter, like cracked driveways. Cracked basement walls, yes. Cracked driveways, no, unless they're bad enough to be a safety/trip hazard.

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Originally Posted by Cincinnati_Kid

Are you serious? A lot of people buy houses because society tells them they have to, or it's the right thing to do. Some people DON"T necessarily NEED a house. That's the point I'm making, and the post above this one, and post #2 reflects what I'm saying. And higher rates on car insurance isn't a negative? Increased crime [[mainly break-ins and car thefts) and bad schools isn't a negative? Cheaper housing costs doesn't negate the increased costs in other areas, so it's basically a wash. Not being negative towards Detroit, just being real.

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I don’t think you’re being very real at all here CK.

Why not just be honest and answer the question of what would happen in your community if denying access to the mortgage loan system was implemented by others who didn’t live there who saw it might be in your best interest for real estate to only be transacted in cash for many miles around where you live? After all they don’t “NEED a house” there either.

There are 2/3 less buyers in cash, people with the cash always know when they are the only game in town and take full advantage of that fact.

I would be willing to bet that the property values would plummet, the crime rate would rise drastically, the schools would go to absolute shit and insurance rates would climb considerably if the State of Ohio did nothing to intervene in those high rates like Michigan has in Detroit. Blight, poverty, population loss and many other problems that Detroit has would come home to roost quickly.

Building home equality in communities is a proven formula for success. It builds generational wealth, something to be handed down to descendants. Good financial values can get passed down with it, not always, but far more often than when there is no money in the family.

What I have noticed in Detroit, at least a few years ago, is that the appraisals are done in a very lazy manner. The bank appointed appraiser simply subtracts $10k from the purchase price and calls it a day. This forces the buyer to put more down further mitigating risk on the banks behalf. With property appreciation in Detroit out performing those in more established areas like the suburbs, it may be the only tool lenders have to both extend credit to buyers and still contain the risk since there are fewer comps to pull from.