NY Transplant discovers that Detroit is just as expensive

**iheartthed** · December-05-14, 08:29 AM

She just allocates the money differently:

"When I add up my monthly expenses in Detroit and compare them to my monthly expenses in New York, they are basically the same. Only the distribution is different. Yes, my rent in New York was twice as much as my mortgage now, but my transportation costs in Detroit are six times higher than they were in New York. That, combined with the unfortunate job insecurity I’ve had since moving here and the walloping tax bill, has made it more and more financially difficult to live here. I chose Detroit because I thought that it was the place that would allow me to pursue my art and yet somehow escape my “starving artist” status. I had been told that art could thrive in the Motor City because artists could do more than just “survive.” So far, neither one has happened for me."

http://nextcity.org/daily/entry/movi...rdable-housing

**Eber Brock Ward** · December-05-14, 10:33 AM

Read that this morning. Seems dramatic.

Many people I know that have located to Detroit don't have cars, and simply bike or walk to work/errands or Uber/Lyft it if the weather's too bad. If she's from NY, she shouldn't be married to a car.

**313WX** · December-05-14, 10:48 AM

Originally Posted by Eber Brock Ward

Read that this morning. Seems dramatic.

Many people I know that have located to Detroit don't have cars, and simply bike or walk to work/errands or Uber/Lyft it if the weather's too bad. If she's from NY, she shouldn't be married to a car.

If you're lucky enough to land one of the limited job openings downtown, don't have kids and don't do much in-store shopping, then you wont't need a car.

In Michigan's real world, you're most likely going to be working in Southfield/Dearborn/Auburn Hills/Warren/Troy, where reliable transportation will be a must to reach these places if you live in Detroit. You're also going to need a car to reach the major retailers in the suburbs/on the edge of town. And your kids will likely have to travel quite a distance to attend decent schools

**wolverine** · December-08-14, 06:30 PM

Originally Posted by 313WX

If you're lucky enough to land one of the limited job openings downtown, don't have kids and don't do much in-store shopping, then you wont't need a car.

In Michigan's real world, you're most likely going to be working in Southfield/Dearborn/Auburn Hills/Warren/Troy, where reliable transportation will be a must to reach these places if you live in Detroit. You're also going to need a car to reach the major retailers in the suburbs/on the edge of town. And your kids will likely have to travel quite a distance to attend decent schools

I think the take-away message here is that big cities will always be expensive places. Real estate seems to be first thing on people's minds rather than the ancillary costs of living like paying taxes, driving or taking transit, insurance as well as time and convenience. My cost of renting a pricey small apartment in Chicago, means not having a car, but I do get convenient public transit, great services and plenty of restaurants and shopping. In other words, I'm paying for location and a great urban experience. Detroit is the complete opposite. You can buy a great piece of property and have a great hobby fixing it up and plenty of space...plus parking is cheap. But what about services? What about proximity to nightlife and shopping? Safety? 24 hour full service Grocery store within walking distance?

You can compare all sorts of cities but rarely will you find a place that offers it all with great value. You just need to find a place that suits your interests. Unfortunately, it didn't work out for the author of the article.

**Dumpling** · December-08-14, 07:28 PM

Here is a pie chart for the City of Detroit income:

http://www.detroitmi.gov/Portals/0/d...ie%20Chart.pdf

The property tax chunk is less than ten percent. On a low income paying the property tax PLUS upfront repair costs for a scrapped and squatted house OR for money borrowed to repair the scrapped and squatted house would be onerous. A damaged vacant house in a nice area
brings down the value of neighboring houses by an estimated $7000 per house. I don't know exactly how many neighboring houses would be affected, but let's say, three houses in back of
the damaged house, one house on either side, and three houses across the street from the
damaged house are affected to the $7000 level. This is $28,000 of appraised home value
lost from the adjacent houses. I think if you weighed the tax loss [[given that property tax
is still being collected) from that effect against a full tax credit for a scrapped/squatted house to be fixed up it will come out to be the same.

**313WX** · December-08-14, 07:35 PM

Originally Posted by Dumpling

Here is a pie chart for the City of Detroit income:

http://www.detroitmi.gov/Portals/0/d...ie%20Chart.pdf

The property tax chunk is less than ten percent.

I wasn't including non-tax revenue in my response to you earlier...

**canuck** · December-08-14, 07:36 PM

Originally Posted by wolverine

I think the take-away message here is that big cities will always be expensive places. Real estate seems to be first thing on people's minds rather than the ancillary costs of living like paying taxes, driving or taking transit, insurance as well as time and convenience. My cost of renting a pricey small apartment in Chicago, means not having a car, but I do get convenient public transit, great services and plenty of restaurants and shopping. In other words, I'm paying for location and a great urban experience. Detroit is the complete opposite. You can buy a great piece of property and have a great hobby fixing it up and plenty of space...plus parking is cheap. But what about services? What about proximity to nightlife and shopping? Safety? 24 hour full service Grocery store within walking distance?

You can compare all sorts of cities but rarely will you find a place that offers it all with great value. You just need to find a place that suits your interests. Unfortunately, it didn't work out for the author of the article.

In a bloody nut freaking shell.

I think though that beyond the problems that have plagued Detroit to the point where there are abysmal conditions like high crime, lack of transit, a ghettoized populace, underperforming schools, and the rest; at one point, there is investment by people who have decided to defy the cliché and will stick it out. A big round of applause for Sumas, EastsideAl, etc... who continue to stake their claim on Detroit the way countless people have done for three centuries now.

If you look at the numbers Eber Brock Ward presents for Woodbridge for instance, it can be pretty encouraging. Just imagine a series of tweaks that would revive interest in the city in an explicable way like say, an imaginative tax abatement program for residents and homeowners whose investments are insecure until someone gives them a break to start the ball rolling. Nixing 4 or 5 grand a year on property tax for three years might do wonders to small scale resident investors and developers alike. The important thing is not to expect or even provoke an unstable boom so that overbuilding and dumb speculative practices undo the valuation of overall investment.

A Dan Gilbert can imagine a day where tweaks in the system can deliver real promise in Detroitland, I am sure of it, otherwise he would not have put so much effort on attracting corporate HQ's and personnel downtown. Of course on the face of it, it is much easier to coax a company into moving 300 folks to offices in the midst of a business district than attracting individual investors in some unsavory parts of the metropolis but it is a matter of time and effort on an other scale.

Detroit's biggest fault is the racial divide, and it will disappear.

The rest of the portrait is not an easy one to fix but it is surmountable.

Always keep in mind that the metropolitan region is wealthy, and that the resources around the city are symbiotic, that the recentering of downtown as the preeminent business district will be an excellent way to vivify the inner city.

**iheartthed** · December-05-14, 10:48 AM

Originally Posted by Eber Brock Ward

Read that this morning. Seems dramatic.

Many people I know that have located to Detroit don't have cars, and simply bike or walk to work/errands or Uber/Lyft it if the weather's too bad. If she's from NY, she shouldn't be married to a car.

You have dramatically reduced mobility living without a car in Detroit versus living in New York without one.

**TTime** · December-05-14, 05:34 PM

Originally Posted by Eber Brock Ward

Read that this morning. Seems dramatic.Many people I know that have located to Detroit don't have cars, and simply bike or walk to work/errands or Uber/Lyft it if the weather's too bad. If she's from NY, she shouldn't be married to a car.

I lived without a car in a major city for 3 years and loved it but would lose my frickin mind if I tried to go carless for a week in Detroit.

**bailey** · December-05-14, 10:49 AM

I realize now that perhaps I was naïve,

The only statement in that article one needs to read.

Might also not have gotten into this situation if she was rending for 1000 a month... probably a better apples to apples comparison as she wasn't owning in NYC.

Not sure, but I don't think NYC has NEZs like Detroit that cover large residential options. Maybe before demanding someone "do something" to attract residents, she might research the incentives available for new residents?

**iheartthed** · December-05-14, 11:38 AM

Originally Posted by bailey

Not sure, but I don't think NYC has NEZs like Detroit that cover large residential options. Maybe before demanding someone "do something" to attract residents, she might research the incentives available for new residents?

It's not structured the same way, but NYC does provide tax incentives in the way of brownfield credits and affordable housing credits for developers. But these credits tend to not be aimed at the 99%. A family living in a single family house in Queens or Staten Island might be shocked to find that they pay as much in taxes as a family in Manhattan does on a condo worth tens of millions of dollars.

Here's an NYT article about taxes on super-high end condos: http://www.nytimes.com/2012/10/16/ny...tax-rates.html

And here's a house for sale on Staten Island that would have nearly the same annual tax bill as an almost $100 million condo in Manhattan: http://streeteasy.com/sale/1130890-t...-staten-island

**bailey** · December-05-14, 11:58 AM

Originally Posted by iheartthed

It's not structured the same way, but NYC does provide tax incentives in the way of brownfield credits and affordable housing credits for developers. But these credits tend to not be aimed at the 99%. A family living in a single family house in Queens or Staten Island might be shocked to find that they pay as much in taxes as a family in Manhattan does on a condo worth tens of millions of dollars.

Here's an NYT article about taxes on super-high end condos: http://www.nytimes.com/2012/10/16/ny...tax-rates.html

And here's a house for sale on Staten Island that would have nearly the same annual tax bill as an almost $100 million condo in Manhattan: http://streeteasy.com/sale/1130890-t...-staten-island

Ok. But that is vastly different from the broad availablity of the Detroit NEZs. Not just 1%ers or developers. This particular starving artist could have purchased a property in one. She went nuts over the 30k price tag and DID NO FURTHER RESEARCH about what her costs of living would be.

YES she has a point that insurance, property taxes and needing a car are issues. HOWEVER, there are options focused at addressing the property tax issue that she is blithely unaware of. She's lamenting that no one is doing anything...except they are... she was just too "naive" to actually look at anything past purchase price per square foot.

**iheartthed** · December-05-14, 12:08 PM

Originally Posted by bailey

Ok. But that is vastly different from the broad availablity of the Detroit NEZs. Not just 1%ers or developers. This particular starving artist could have purchased a property in one. She went nuts over the 30k price tag and DID NO FURTHER RESEARCH about what her costs of living would be.

YES she has a point that insurance, property taxes and needing a car are issues. HOWEVER, there are options focused at addressing the property tax issue that she is blithely unaware of. She's lamenting that no one is doing anything...except they are... she was just too "naive" to actually look at anything past purchase price per square foot.

Point taken.

**Bham1982** · December-05-14, 12:12 PM

Originally Posted by iheartthed

It's not structured the same way, but NYC does provide tax incentives in the way of brownfield credits and affordable housing credits for developers. But these credits tend to not be aimed at the 99%. A family living in a single family house in Queens or Staten Island might be shocked to find that they pay as much in taxes as a family in Manhattan does on a condo worth tens of millions of dollars.

You have it completely reversed.

Property taxes on single family homes in NYC are much lower than property taxes on coops and condos.

In fact, this has been a huge issue throughout the years, with coop and condo owners complaining that people on Staten Island and the suburban parts of the city are being subsidized by the residents in the more urban neighborhoods.

A $1 million coop or condo in the city will have about a 30% higher tax bill than a $1 million single family home. There is a push to get these equalized, but the Staten Island delegation in the State legislature has been fighting this since forever.

The link you cite is basically the one exception to the rule. There is a special, temporary State tax break [[called 31-J or something), that lasts for either 10 years or 20 years, that was offered in the 1990's, on certain coops and condos, in distressed parts of the State.

That tax break has since been largely eliminated, but there was a developer who somehow got the state legislature to single out a single condo property of his for this tax break, even though the property is hardly in a distressed area. That special deal is now being investigated by the state attorney general. It just happens that the developer gave millions in donations to the legislators sponsoring the special carve-out.

But 99.9% of condos and coops do not have that tax break attached to their property, and pay much higher property taxes than equivalent value single family homes.

And that real estate listing link you posted, BTW, is just flat wrong. They're listing the annual taxes, not the monthly taxes. A 475k single family home on Staten Island would have 4-5k in annual taxes, which is what it lists for the month. Even the highest property tax jurisdictions in the U.S. do not come close to 40k in annual taxes on a 475k home [[I doubt the highest tax jurisdictions are even close to half that bill).

**nain rouge** · December-05-14, 10:55 AM

When I lived in Midtown, most of the other people I knew that lived there did NOT list Detroit as their legal residence. Otherwise, the taxes and car insurance will destroy you. That's a big part of the secret of "affordable" Detroit. If you come in from another state with a nice car and make Detroit your legal residence, you just screwed yourself big time.

**313WX** · December-05-14, 11:02 AM

Originally Posted by nain rouge

When I lived in Midtown, most of the other people I knew that lived there did NOT list Detroit as their legal residence. Otherwise, the taxes and car insurance will destroy you. That's a big part of the secret of "affordable" Detroit. If you come in from another state with a nice car and make Detroit your legal residence, you just screwed yourself big time.

Very true.

And you best believe most of the yuppies moving down there still aren't claiming a Detroit residence. Having more people down there is nice, but the city loses out on population-based tax revenue and government representation with these people committing tax/insurance fraud...

**nain rouge** · December-05-14, 11:08 AM

Yep, when I claimed Detroit as my residence, everyone I knew in Midtown looked at me with bug eyes. But I didn't own a car, so I could stomach the income tax. I viewed it as my charitable act for the year.

**bailey** · December-05-14, 11:10 AM

Originally Posted by 313WX

Very true.

And you best believe most of the yuppies moving down there still aren't claiming a Detroit residence. Having more people down there is nice, but the city loses out on population-based tax revenue and government representation with these people committing tax/insurance fraud...

You're only really going to benefit if you're renting. and part of the rent is tax. I mean no one is buying a place in Detroit and then NOT get the PRE, that can't make any financial sense. So they arent ripping off Detroit.... they're just making insurance more expensive by not being part of that pool.

however, insurers are getting more agressive around here. When those residents go to make a claim, there is a pretty solid chance they're going to get a nice fat denial letter [[especially in Detroit). Which always makes me smile. Just watched it happen again. 18 month old car, stolen and found pretty much destroyed, home address listed as milford [[IIRC) at mom an dad's, mom and dad not on car note or policy. Insurance company called them all in for depositions. after investigation, denied coverage. now, note holder coming after her for the payments on a car I think she got a few grand on at a junk yard. schadenfreude is epic.

MAcc · December-11-14, 03:52 PM

Originally Posted by nain rouge

When I lived in Midtown, most of the other people I knew that lived there did NOT list Detroit as their legal residence. Otherwise, the taxes and car insurance will destroy you. That's a big part of the secret of "affordable" Detroit. If you come in from another state with a nice car and make Detroit your legal residence, you just screwed yourself big time.

Advocating insurance fraud, a felony punishable by imprisonment for not more than 4 years or a fine of not more than $50,000.00, or both. Nice.

**nain rouge** · December-05-14, 11:13 AM

Originally Posted by bailey

So they arent ripping off Detroit.... they're just making insurance more expensive by not being part of that pool.

I'm with you on a lot of this, but car insurance is a scam in Michigan.

**Gpwrangler** · December-05-14, 03:14 PM

Originally Posted by nain rouge

I'm with you on a lot of this, but car insurance is a scam in Michigan. [/COLOR]

Yes, but it is legal for the insurance companies to scam us. It is illegal for us to scam them.

**RO_Resident** · December-05-14, 11:33 AM

Proposal A makes it hard to do an apples-to-apples comparison for taxes on a property.

No doubt Detroit's homesteaded millage rate is higher than Livonia's [[68.44 mills vs 39.36 mills according to Mi Treasury's property tax estimator). It's 70 percent higher in Detroit.

With a purchase, the city will uncap any property taxes. So, a new sale in Detroit of $100,000 [[SEV of $50,000) will have a tax bill of ~$3,422. The new sale in Livonia of $325,000 [[SEV of $162,500) would be ~$6,396.

So, the taxes on a new sale in either community would be roughly double in Livonia. The only way the taxes would be roughly the same would be the same is if the family owned the property for a long period of time which would keep the taxable value low.

And yes, I largely agree with the article, especially with the insurance costs.

**ABetterDetroit** · December-05-14, 05:36 PM

Originally Posted by RO_Resident

Proposal A makes it hard to do an apples-to-apples comparison for taxes on a property.

No doubt Detroit's homesteaded millage rate is higher than Livonia's [[68.44 mills vs 39.36 mills according to Mi Treasury's property tax estimator). It's 70 percent higher in Detroit.

With a purchase, the city will uncap any property taxes. So, a new sale in Detroit of $100,000 [[SEV of $50,000) will have a tax bill of ~$3,422. The new sale in Livonia of $325,000 [[SEV of $162,500) would be ~$6,396.

So, the taxes on a new sale in either community would be roughly double in Livonia. The only way the taxes would be roughly the same would be the same is if the family owned the property for a long period of time which would keep the taxable value low.

And yes, I largely agree with the article, especially with the insurance costs.

Proposal A was just another special interest [[old people) tax break and nothing more. It certainly was NOT property tax reform. Just look at who benefited, the people who had been in their homes for a long time. Who did it punish the most? Young people with growing families who would need to get bigger houses, first time home buyers and people moving here needing houses. After 20 years what have we got? A declining population. One of the worst performing housing markets statewide in the country in that time period and still top ten highest property taxes in the country.

We bit off our nose to spite our face. One of the largest wealth generators for individuals in America is appreciation of value in the primary residence. Hows that been working around here for the last 20 years? High property taxes on low value homes is a economy and neighborhood destroyer. 4k in property taxes is ridiculously high period.

**dtowncitylover** · December-05-14, 12:04 PM

I would gather that this has more to do with her career field than with pure dollars. She's an artist. Artists aren't exactly known to be on the top of the pay scale [[sure, they have have their big breaks from time to time). I'm sure if she worked for one of the Big 3, QL, or some other corporate entity she could survive relatively easily, as most people I see/know do. But no, she's an artist. Nothing wrong with that. But I think she was duped if she thought she could come here and suddenly be as stable as a 9-5er. If she was a starving artist in NYC, the epicenter of American culture and art, then what made her think she would be living comfortably here, one of America's largest provincial towns. Sure, she might get her foot in the Detroit art scene door easier but I wouldn't equate that with making big bucks.

**RickBeall** · December-05-14, 01:08 PM

Notice that she is comparing paying a mortgage in Detroit to paying rent in New York. Those two are quite different.

She is right in that insurance rates for cars in Detroit and Hamtramck are really high. I'm paying $1,500 a year per car for nothing.

She just has to budget differently. She has to rent, and budget for a car and all it's hidden costs. You can't really live in Detroit without a car, unless the places you need to go are very carefully thought out and nearby.