Detroiters loyal to city's renewal [[Boston-Edison Commentary)

[begingri]

Lisa Johanon

Yes, cops can afford to live in our neighborhood.

While we as longtime Detroiters empathize with Detroit City Council President Pro-Tem Gary Brown's concerns about the affordability of living in the city, we wanted to set the record straight about our neighborhood — Boston-Edison — in particular. Home ownership there can cost less than the national standard.

While much of the attention has centered on Mayor Dave Bing's efforts to lure residents to targeted areas, those of us who live and work in the Boston-Edison Historic District have been working diligently over the last several years with a collaborative to save our neighborhood. The first phase of that effort — done through a public-private partnership — was the purchase of 10 vacant homes, three of which have already been sold.

Because our historic neighborhood is home to stately, mansion-like homes, it's easy to forget that there are smaller houses here, too. The collaborative's first phase is to rehabilitate houses that range from 2,600 to 3,100 square feet.

Boston-Edison has been hard-hit by foreclosures and will experience further decline without market intervention. Approximately 20 percent of the homes in Boston-Edison are vacant, signaling a community in distress.

Continued at: http://detnews.com/article/20110330/OPINION01/103300333/Detroiters-loyal-to-city’s-renewal#ixzz1I3e0MHrW

[mwilbert]

From the same article:

The cost to rehabilitate a 3,000-square-foot home in Boston-Edison is about $170,000; however, that same home will only appraise for approximately $75,000 to $80,000.

I love B-E, but that discrepancy does not bode well for the neighborhood.

[JTistle1]

In today's market, a homebuyer with acceptable credit might expect to qualify for a mortgage with an interest rate of 5 percent. The purchaser of a 3,000-square-foot house with an $80,000 mortgage should expect to pay approximately $1,400 in principal, interest, taxes and insurance [[PITI) as a resident in Boston-Edison.

From The Detroit News: http://detnews.com/article/20110330/...#ixzz1I88Usdc5



That's crazy, I just went to a mortgage calculator that figured an $80,000 15 year mortgage at 5% that the payments would be $715.97 a month. A 30 year mortgage would $512.79 a month. [[ On a side note, that shows me that a 15 year mortgage is well worth the extra 200 bucks a month to cut the mortgage payments in half.)These are figured with a 1.25% property tax rate. Are you telling me that the insurance in that area costs as much, if not more, than your monthly mortgage payment? No wonder "people can't afford to live in the city".

[Fnemecek]

Actually, the mortgage needs to be based on the rehab costs [[$170 - $180K) and not the appraisal [[$80K). Under ordinary conditions, it would be impossible to get a mortgage for more than double a home's appraised value.

I presume, however, that these aren't ordinary conditions and that the Bing Administration has figured out a way to make that happen.

[Fnemecek]

Oh, and property taxes are far more than 1.25%. They're much closer to 2% - 2.25%.

[mwilbert]

Insurance is probably not the main problem. I don't know where you came up with the 1.25% property tax rate, but the homestead rate in Detroit is about 66 mills on SEV, or 3.3% of assessed value, and I routinely see houses listed in that area where the property taxes are well above that relative to the asking price of the home. Not that they should be, but there is a lot of overassessment everywhere in the city, and I've noticed it is particularly a problem in B-E.

[Goose]

Actually, the mortgage needs to be based on the rehab costs [[$170 - $180K) and not the appraisal [[$80K). Under ordinary conditions, it would be impossible to get a mortgage for more than double a home's appraised value.

I presume, however, that these aren't ordinary conditions and that the Bing Administration has figured out a way to make that happen.

no, the article's premise is that the $80,000 mortgage on the home is affordable, when factoring energy efficienies and such provided by the $170,000 rehab FUNDED BY FEDERAL DOLLARS....

more FED money that we don't have, start the printing press........

[mwilbert]

Under present conditions, I think running the printing press would be an excellent plan, but spending $170,000 to produce a house worth $80,000 isn't a very good way to spend the money that you print.

[JTistle1]

The 1.25% property tax was the default number on the mortgage calculator. I still say that 1400 a month is much more than what the mortgage payment should be.

[mwilbert]

Actually, I agree with that. The number does seem too high--I wonder what the author was assuming for taxes and insurance.

[mikeinmotown]

I lived in Boston Edison on Longfellow back in the early 80's. I loved living there. Back then it was a lot worse but the community spirt was increadable. Today the area looks great. Of course there are some houses that are neglected but over all its a safe place.