Detroit residents gain more benefits from foreclosed homes than external investors

By Elias DaSilva | September 13, 2024.

In Detroit, Michigan, new entrepreneurs in the real estate sector specializing in foreclosed properties, most of whom are backed by investments from local residents, are driving a trend where more foreclosed homes are becoming occupied.

Previously, this market was dominated by limited liability companies, not even based in Michigan, which made quick and significant profits by acquiring these properties. Recent data indicates a decrease in this type of investor, highlighting the fact that Detroit residents are now taking advantage of the new changes, contributing to the city’s recovery.

A new article published in the Substack newsletter The Chargeback explores the shift from external to local investors who buy and renovate homes that come from foreclosure processes and end up in auctions. According to the newsletter, local buyers are changing the traditional course of Detroit’s real estate market. By investing their own effort into renovating their homes, they reduce renovation costs and add value in a way that large external investors can no longer capitalize on.

Since 2005, foreclosures have reached their lowest point, and thanks to new trends in the Detroit market, approximately 9,000 properties are being reoccupied. As a result, the quick-profit method of buying properties at prices below their real value is no longer viable. Currently, the value of homes in the city has risen significantly. With Detroit residents stepping up and the changes occurring in the real estate market, the old foreclosure-rent-foreclosure system is no longer profitable.

According to the nonprofit organization Building Community Value, which helps residents become homeowners and property renovators, their executive director has stated that the Detroit Land Bank is currently helping all potential local buyers by offering them better opportunities to acquire and improve homes.

Wayne County now has a list of foreclosed properties pending sale through auctions, and at least 1,747 homes on that list are located in the city of Detroit, according to data from the county treasurer’s office.

Detroit: 1,747 properties