Detroit and the Affordable Housing Myth

[K-slice]

The longer I live here the more I hear how "Detroit needs more affordable housing". This ever growing chorus comes from the mayor [[and candidates), city council, charitable organizations, businesses, buerocrats, and regular people. When I hear it I feel like Will Farrell in Zolander. "I feel like I'm taking crazy pills!

THERE IS NO SHORTAGE OF AFFORDABLE HOSUING IN DETROIT! Look up real esate listings in almost any neighborhood of the city, with the expetion of like 5, and you'll find hundreds if not thousands of move-in ready homes listed for under $100,000 or slightly above it. That puts your PITI payment at $700/month or less.

So, where does this myth come from and why it is so persistant? Shouldn't Detroit want to appeal to those who dont require "affordable hosuing" to grow the tax base and talented labor pool? Why can't we build new homes to compete with those going up in Canton, Macomb, or Commerce? Shouldn't we want to diversify our housing stock rather than adding what would be essentially the new version of our current post-war tract housing?

I'm at a loss.

[401don]

When I hear the term affordable housing I generally associate it with affordable rents for those with low incomes, whether it's from low wages or fixed incomes of seniors, people with diabilities, etc. Being able to purchase a home is certainly an issue but as long as one has a decent place to live it's not the most important one.
As for the Detroit real estate situation, there have been inexpensive homes to buy for decades but I believed the issue was whether these homes were in a safe enough neighborhood. That's improved somewhat in recent years but I'm sure there's still a direct correlation between price and safety. Of course, schools are still a huge issue for families with kids looking to purchase.

[djtomt]

I agree about the "affordable housing" narrative. Housing in Detroit is very affordable, especially compared to other similar sized metros.

But, it's a narrative that will not go away unless something seismic changes. Developers use the "affordable housing" banner to get tax credits/subsidies [[free money) from government which in turn, drives up ROI [[free money will do that). Politicians award tax credits and immediately publicize them to make it look like they're "doing something" when really they’re doing nothing except giving taxpayer dollars away. It's a vicious cycle.

Safety and schools are definitely a HUGE factor...however, politicians don't seem to want to do anything about these "hard" items. They are more interested in using "low hanging fruit" like affordable housing developments to tout their achievements. I don’t see this changing any time soon.

[softailrider]

Not that affordable if you’re spending 10,000 per year, per kid for private schools. I think most people are looking for decent schools to go along with their property taxes or rent they’re paying.

[sirrealone]

Are they truly move-in ready or do they need significant investment to make up for decades of neglected upkeep?

[ABetterDetroit]

Do you really think that there is a Market for new housing in Detroit proper ‘Starting in the $650s’ like Commerce or Canton and the only thing stopping it is politicians? The waiting lists for affordable RENTALS is years long and the people clamoring for new McMansions in Detroit is non existent. No worries tho, if and when it ever happens capitalism will solve that problem right quick.

[Rocket]

The narrative is so that outside investors can get our money.

I have yet to see one of these rehabs or new builds that isn't getting 8 kinds of subsidies.

Tax breaks. Public money, subsidized HVAC systems, subsidized windows from DTE, etc, etc.

As a result, they do have to offer some percentage of the units at 40% of AMI, then a few more units at 50% AMI and the rest at real market rates.

Not based on size or location, so the owners make the smallest units that face the alley the cheap ones [as they would have anyway], and the nicer, larger units facing the front at market rate.

They have to do that and not sell the property for x-number of years.

[mwilbert]

Why can't we build new homes to compete with those going up in Canton, Macomb, or Commerce? Shouldn't we want to diversify our housing stock rather than adding what would be essentially the new version of our current post-war tract housing?

A more diverse housing stock would be great, and there are plenty of lots and groups of lots and whole blocks where developers could build whatever sort of house they wanted if they thought there would be demand for it. It's not like building affordable housing is stopping people from building other housing--there's no shortage of land and it's a different target buyer/renter. The problem is that there's a limited market for new market-rate single family housing in Detroit, for a bunch of reasons, including taxes, schools, and competition from the existing higher-end single family housing stock that already exists in many Detroit neighborhoods. The result is that not many new houses get built.

[Danny]

The affordable housing myth become a myth when back in the 1970s Detroit Mayor Coleman Young and DHA tricked HUD to make poor people buy any vacant and abandoned homes, fix them up and make it livable. The Problem is that poor and low-income folks to don't the budget to fix their homes up and the result of more hoods become blighted.

[stasu1213]

Affordable housing is also for those whom are the working poor, average yearly income ranging from $20 to $$40,000 yearly, to afford living in communities where the average income is around $70,000 and up. Low income housing is for residents whom are on section 8

[K-slice]

Do you really think that there is a Market for new housing in Detroit proper ‘Starting in the $650s’ like Commerce or Canton and the only thing stopping it is politicians? The waiting lists for affordable RENTALS is years long and the people clamoring for new McMansions in Detroit is non existent. No worries tho, if and when it ever happens capitalism will solve that problem right quick.

I believe there is, if it was to be built at scale in the right area. Look at City Modern if you need proof. Townhomes there are selling for $500K+ with some going over $1mil. North Corktown, Core City, North End, and more are all areas that are very desireable location-wise.

So what does that say when people will sit on a waitiling list for years to rent a home or apartment, when there are homes they could buy for the same monthly price or lower? Beggars THINK they can be choosers?

Your comment doesn't challenge my whole point that we have have an affordable housing oversupply, very little for someone who wants to live in a nicley appointed new build, and a myth that we need to build more affordable housing.

[JBMcB]

The narrative is so that outside investors can get our money.

Not just outside investors. Local developers whom happen to be close acquaintances, or business partners, or relatives of politicians get a piece too.

It's not uncommon. The grift was so outrageous in LA that they shut down the LA development authority, that absorbed billions of dollars of development funds over the course of thirty years or so, acquired dozens of parcels of land, and built a grand total of one small apartment building and one strip mall.

[13606Cedargrove]

Typical Los Angeles/California graft. No one goes to jail, no one loses their job.

[DetroiterOnTheWestCoast]

Not just outside investors. Local developers whom happen to be close acquaintances, or business partners, or relatives of politicians get a piece too.

It's not uncommon. The grift was so outrageous in LA that they shut down the LA development authority, that absorbed billions of dollars of development funds over the course of thirty years or so, acquired dozens of parcels of land, and built a grand total of one small apartment building and one strip mall.

Tell us which LA Development Authority was shut down and when.

https://www.lacda.org/

[ABetterDetroit]

I believe there is, if it was to be built at scale in the right area. Look at City Modern if you need proof. Townhomes there are selling for $500K+ with some going over $1mil.

We agree! City Modern was an excellent development. How it is proof that Developments subsidized by Detroit's tax payers should NOT have any ‘Affordable’ units makes zero sense to me when that project was clearly conceived, built and completed with a percentage of affordable housing in it.

See The Flats Here:

https://www.citymoderndetroit.com/

Next, your argument that because the fact is true that Detroit does have an abundance of 100K old houses that are very difficult to mortgage that just need buyers so there is No need for affordable rental housing in new developments subsidized by Detroit taxpayers… Well, we will just have to disagree.

Developers that don’t need free land and tax capture etc… and build 100% market rate? Godspeed to them, and you and I both hope there will be more ASAP.

[JBMcB]

Tell us which LA Development Authority was shut down and when.
https://www.lacda.org/

The regional entity run by the state of California covering LA, shut down in 2012 along with all 400 or so other regional development authorities.

https://www.buchalter.com/publicatio...ment-agencies/

Some parts of it were absorbed into the LACDA, but most contracts were simply cancelled as nothing was happening with them.

[DetroiterOnTheWestCoast]

The regional entity run by the state of California covering LA, shut down in 2012 along with all 400 or so other regional development authorities.

https://www.buchalter.com/publicatio...ment-agencies/

Some parts of it were absorbed into the LACDA, but most contracts were simply cancelled as nothing was happening with them.

None of that specifically related to LA; it pertained to all of the RDA’s in CA. Saying they “absorbed billions” and built one strip mall sounds like conspiracy theory Fox nonsense

[JBMcB]

None of that specifically related to LA; it pertained to all of the RDA’s in CA. Saying they “absorbed billions” and built one strip mall sounds like conspiracy theory Fox nonsense

It sure does! While it was under the RDA regime, what did CRA/LA build?

[K-slice]

More news stoking the myth.

Detroit is in a "housing chrisis"? Is the chrisis that we have too many affordable homes and very little to attract the upwardly mobile middle class, retirees, empty nesters, etc?

https://www.modeldmedia.com/features...E1Hrhw8bUGMVaw