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U.S Department of Housing and Urban Development
U.S. Department of the Treasury

Spotlight on the Housing

Market in the Detroit-WarrenLivonia, Michigan MSA
U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market andPolicy Development and Research | January 2013
The Detroit-Warren-Livonia, Metropolitan Statistical Area (Detroit) is located in southeast Michigan and includes six counties: Wayne (including
the city of Detroit), Lapeer, Livingston, Macomb, Oakland and St. Clair. As with other parts of the Midwest, the foreclosure crisis in Detroit
developed earlier and differently than in other areas of the nation. As early as mid-2002, the share of distressed mortgages in Detroit was above
that of the nation and rising -- the rapid rise of distressed mortgages nationally did not begin until 2007. A substantial share of mortgages in the
Detroit area prior to 2007 were high cost or subprime loans which default at much higher rates than other loans. By 2007, Detroit had already
experienced several years of unemployment above the national average and population declines. Detroit did not experience the rapid price
appreciation of the housing bubble; yet, home prices fell by a far greater percentage than for the nation. Declining property values were driven
in part by excess housing construction and investor speculation, but mainly by rising defaults, spurred first by unsustainable mortgages, then by
a sharp downturn in the economy and rising unemployment. Economic conditions in Detroit are improving but the local housing market remains
fragile with a high concentration of distressed sales, large numbers of vacancies, and 42 percent of home mortgages underwater. However,
the Administration’s broad approach to stabilize the housing market has been a real help to homeowners in Detroit and surrounding cities. This
addendum to the Obama Administration’s Housing Scorecard provides a summary of trends and conditions in the local economy and the impact
of the Administration’s efforts to stabilize the housing market and help local homeowners.

Population Growth, Employment,
and Housing Market:
With 4.3 million people according to the most recent
Census, the Detroit MSA is the 12th largest in the nation.
From 2000 to 2010, the population declined by an average
of 15,650 people, or 0.4 percent a year. The number of
people who left the area outweighed the natural population
growth (births minus deaths). An average of 25,750 people
moved out of the MSA each year from mid-2000 to
mid-2005, with this number increasing to 44,200 people
from mid-2005 to mid-2010 as the economy worsened.
During the decade spanned by the Census, new housing
production exceeded household growth in the Detroit MSA.
Net annual housing unit growth of 0.5 percent was greater
than the corresponding population and household growth
rates of - 0.4 percent and - 0.1 percent, respectively. This
excess construction, while not as great as in some parts
of the nation, nevertheless contributed to an oversupply
of housing and may have led to steeper price declines
after 2005. Investor speculation was likely a factor in
Detroit Housing Unit Growth Outpaced Population and
Household Growth During the Past Decade
Date of Census



Detroit Population



Annual Growth Rate
Detroit Households





Annual Growth Rate
Detroit Housing Units







Annual Growth Rate
Source: Census Bureau (2000 and 2010 Decennial)

Spotlight on the Housing Market in the Detroit-Warren-Livonia, Michigan MSA | Page 1

U.S Department of Housing and Urban Development
U.S. Department of the Treasury

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market andPolicy Development and Research | January 2013
the overbuilding in the years leading up to the crisis, as
a large share of Detroit area home purchases were by
non-occupant investors. Specifically, from 2000 to 2006,
investor home sales rose from 6.3 to 16.0 percent of total
sales in the Detroit-Livonia-Dearborn, MI Metropolitan
Division, while the corresponding increase for the nation
was from 7.8 to 14.6 percent of sales. Subprime lending
also fueled the overbuilding in Detroit, as research by
the National Bureau of Economic Research shows that
29 percent of new mortgages in Detroit in 2005 were
subprime loans. Approximately 90 percent of subprime
mortgages experience increases in monthly payments of
30 to 50 percent within a few years according to a study
by the Center for Responsible Lending, and analysis by the
Michigan Council of Governments found subprime loans
default at more than 7 times the rate of other mortgages.
According to the Census Bureau, the number of vacant units
increased by an average of 10,400 units (10.4 percent)
annually in Detroit during the 2000s, more than double the
national average increase of 4.4 percent during the same
A modest economic recovery is underway in
Detroit. The local economy had been experiencing a slight
drop in employment before a steep decline began in 2006.
From the fourth quarter of 2003 through 2005, nonfarm
payrolls declined at an average annual rate of 6,800 or
0.3 percent. Job losses accelerated from 2006 through the
first quarter of 2010, declining at an average annual rate
of 75,300 jobs, or 3.7 percent. Detroit has historically been
known as a national center of manufacturing, and the loss
of manufacturing jobs has been significant. From the fourth
quarter of 2003 through 2005, manufacturing employment
declined at a rate of 5,200 jobs, or 1.7 percent annually.
As with nonfarm payrolls, manufacturing employment
declined more rapidly from 2006 through the first quarter
of 2010 - at an annual rate of 25,800 jobs or 8.8 percent.
The Detroit economy has improved since the first quarter of
2010, with payrolls increasing at an average annual rate of
29,800, or 1.7 percent through the end of 2012. Growth
was led by the manufacturing and professional and business
services sectors, which grew at annual rates of 6.8 percent
and 5.3 percent, respectively, more than offsetting job losses
in the government sector which declined by 3.8 percent. The
unemployment rate for Detroit peaked at 16.0 percent in
October 2009 and declined to 9.2 percent by April 2012;
it has since climbed to 10.8 percent as of December 2012,
which might be expected since more people seek work when
there are greater job prospects. The national unemployment
rate peaked in October 2009 at 10.0 percent, falling to 7.9
percent by January 2013.
Existing home sales in the Detroit MSA have
improved since 2007 and new home sales are
strengthening. Existing home sales peaked in 2004
at 86,800 units, declined to 64,900 by 2007 before
recovering to 76,900 homes sold in 2011. New home

Spotlight on the Housing Market in the Detroit-Warren-Livonia, Michigan MSA | Page 2

U.S Department of Housing and Urban Development
U.S. Department of the Treasury

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market andPolicy Development and Research | January 2013
sales peaked at 12,350 in 2004 before declining sharply
in 2006 and 2007 and remain at historically low levels,
although sales have been strengthening since 2009.
Distressed sales (involving bank-owned properties or short
sales) remain high at 42 percent of existing home sales for
the year, compared to a national rate of 26 percent. The
prevalence of distressed sales in Detroit has contributed to
the prolonged weakness in home prices as well as the low
levels of new home construction and sales. The CoreLogic
repeat-sales house price index (HPI) shows that home prices
in the Detroit-Livonia-Dearborn, MI Metropolitan Division
rose at one-fourth the pace of the rest of the nation between
2000 and early-2006. Although home prices in Detroit
never experienced the bubble that the rest of the nation
did, prices nonetheless fell 51 percent from their peak in
December 2005 to their low in April 2009 compared to a
national peak-to-low decline of 31 percent. House prices in
Detroit have since bounced back by 20 percent from their
2009 lows, outpacing a 6 percent increase nationally.
The Detroit rental market is experiencing growth
in rental prices. According to MPF Research, the Detroit
apartment vacancy rate was 4.3 percent in the third
quarter of 2012, up from 3.8 percent a year earlier, but
still representing balanced market conditions. The national
apartment vacancy rate declined from 5.1 to 4.6 percent
over the same period. During the third quarter of 2012, the
average apartment rent in Detroit increased by 6 percent
from the previous year to $805. National average rent levels
increased by 4 percent to $1,086 during the same period.

Trends in Mortgage
Delinquencies and Foreclosures:

Detroit homeowners continue to struggle with high rates
of mortgage delinquency and foreclosure. According
to LPS Applied Analytics, as of November 2012 Detroit
placed 122nd out of 366 metropolitan areas ranked by
share of mortgages at risk of foreclosure (90 or more days
delinquent or in the foreclosure process). Through the
efforts of numerous state and local entities in partnership
with the federal government the foreclosure situation in
Detroit has improved. LPS data show that mortgages at
risk of foreclosure decreased by 23.5 percent during the
last year, from 32,750 in November 2011 to 25,050 in
Foreclosure Completion Rates in the Detroit-Warren-Livonia MSA
Fourth Quarter 2012
Detroit MSA



Since April 1, 2009










Note: Foreclosure Rates as Percent of All Housing Units; Data through
December 2012 for Foreclosures since April 2009
Source: Realty Trac and Census Bureau

November 2012, compared with a national decline of 8.3 percent during the
same period. CoreLogic data since 2000 indicate that the rate of mortgages at
risk of foreclosure in the Detroit MSA began to rise above the national rate in
mid-2002, reflecting weakening economic conditions and defaulting subprime
loans. The rate of seriously delinquent mortgages followed the national trend
of increasing in 2007 and 2008, when single-family foreclosures were largely
driven by unaffordable loan products. Beginning in 2009, foreclosures were
increasingly driven by loss of income, unemployment, and strategic defaults
according to research by the Federal Reserve Bank of Chicago. A sharp spike
upward in the rate of distressed mortgages occurred at this time for both Detroit
and the nation as the economy worsened. After peaking in early 2010 at
9.8 percent, the share of distressed mortgages in Detroit has declined to 4.8
percent. National rates of distressed mortgages declined from a high of 7.9
percent in early 2010 to 6.0 percent currently.
Despite the reduction in distressed mortgages since 2010, the cumulative
foreclosure completion rate in the Detroit MSA since April 1, 2009 is 7.0
percent of housing units, nearly triple the national rate of 2.4 percent.
Foreclosure completions have been trending downward nationally and in the
Detroit MSA. As of the fourth quarter of 2012, completed foreclosures in Detroit
are 16 percent below the previous year, while completed foreclosures in the
nation fell by 6 percent during the same period. Lenders’ review of internal
procedures related to the foreclosure process and backlogs in the courts for
states with a judicial process have contributed to the decline in foreclosure
activity. In the wake of the February 2012 National Mortgage Servicing
Settlement, however, foreclosure activity is starting to pick up again, primarily
in states where the process slowed dramatically in the last two years. CoreLogic
reports that 42 percent of mortgages in the Detroit MSA were underwater as of
the third quarter of 2012— compared to 22 percent nationally—representing
additional homeowners potentially at risk.

The Administration’s Efforts to Stabilize the
Detroit Housing Market:
The Administration’s mortgage and neighborhood assistance programs
-- the Home Affordable Modification Program (HAMP), the Federal Housing
Administration (FHA) mortgage assistance programs, the Neighborhood
Stabilization Program (NSP), and the Hardest Hit Fund (HHF) program –
combined with assistance from the HOPE Now Alliance of mortgage servicers
and the National Mortgage Servicing Settlement have helped stabilize the

Spotlight on the Housing Market in the Detroit-Warren-Livonia, Michigan MSA | Page 3

U.S Department of Housing and Urban Development
U.S. Department of the Treasury

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market andPolicy Development and Research | January 2013

Detroit housing market.
From the launch of the Administration’s assistance programs
in April 2009 through the end of November 2012, nearly
97,500 homeowners received mortgage assistance in the
Detroit metropolitan area. More than 48,100 interventions
were completed through the HAMP and FHA loss mitigation
and early delinquency intervention programs. An estimated
additional 49,400 proprietary mortgage modifications
have been made through HOPE Now Alliance servicers.
While some homeowners may have received help from
more than one program, the number of times assistance has
been provided in the Detroit MSA is more than three-fourths
the number of foreclosures completed during this period
(129,300). This relatively low ratio of mortgage assistance
to foreclosures in Detroit since April 2009 (0.75 to 1
compared to 1.9 to 1 for the nation) is likely related to the
persistently higher unemployment rates in Detroit over this
time, making it harder to effect mortgage assistance. Under
the landmark National Mortgage Servicing Settlement, over
10,000 Michigan homeowners had benefitted from nearly
$500 million in refinancing, short sales and completed
or trial loan modifications, including principal reduction
on first and second lien mortgages as of September 30,
2012. Nationwide, the settlement has provided more than
$26.1 billion in consumer relief benefits to over 300,000
families. That is in addition to the $2.5 billion in payments
to participating states and $1.5 billion in direct payments
to borrowers who were foreclosed upon between 2008
and 2011.
Given over three rounds, the Neighborhood
Stabilization Program has invested $7 billion
nationwide to help localities work with non-profits and
community development corporations to turn tens of
thousands of abandoned and foreclosed homes that lower
property values into homeownership opportunities and the
affordable rental housing that communities need.
NSP1 funds were granted to all states and selected local
governments on a formula basis under Division B, Title III of
the Housing and Economic Recovery Act (HERA) of 2008;
NSP2 funds authorized under the American Recovery and
Reinvestment Act (the Recovery Act) of 2009 provided grants
to states, local governments, nonprofits and a consortium of
nonprofit entities on a competitive basis; and NSP3 funds
authorized under the Dodd–Frank Wall Street Reform and
Consumer Protection Act of 2010 provided neighborhood
stabilization grants to all states and select governments on a
formula basis.
In addition to stabilizing neighborhoods and providing
affordable housing, NSP funds have helped save jobs.
Each home purchased, rehabilitated and sold through the
NSP program is the result of the efforts of 35 to 50 local

Detroit MSA: CumulaƟve Offers of Aid by Source Compared with Foreclosures Since April 1, 2009 (Thousands)

Detroit MSA NSP Activity (Housing Units)
NSP1 Total
Clearance and demolition
Construction of new housing
Homeownership assistance to low-and moderate income
Rehabilitation/reconstruction of residential structures
NSP2 Total

Projected Completed















Construction of new housing



Homeownership assistance to low-and moderate income



Rehabilitation/reconstruction of residential structures



Clearance and demolition



Clearance and demolition



Construction of new housing







NSP3 Total

Homeownership assistance to low-and moderate income
Rehabilitation/reconstruction of residential structures

Overall, a total of $140 million has been awarded to 10 NSP grantees in the
Detroit MSA. Under NSP2, the Michigan State Housing Development Authority
(MSHDA) received nearly $224 million, and it awarded over $68 million
to cities in the Detroit MSA. Approximately 1,395 households have already
benefited from NSP and 5,891 blighted properties have been demolished;
activities funded by the program are expected to provide assistance to an
additional 4,012 owner-occupied and renter households. Examples of how
these funds have been put to use are provided below.
Revitalization and Demolition in Detroit
The Michigan State Housing Development Authority (MSHDA) has the oversight
responsibility for multiple funding sources from HUD and the State of Michigan.
In addition to the $224 million it received under NSP2, MSHDA received

Spotlight on the Housing Market in the Detroit-Warren-Livonia, Michigan MSA | Page 4

U.S Department of Housing and Urban Development
U.S. Department of the Treasury

U.S. Department of Housing and Urban Development | Office of Help American Homeowners
The Obama Administration’s Efforts to Stabilize the Housing Market andPolicy Development and Research | January 2013

an allocation of $15 million for demolition from the State Attorneys
General Settlement fund, and $4 million from the Cities of Promise
initiative. Over the last several years these funds have been utilized
primarily within Michigan’s urban centers, the largest of which is the
City of Detroit.
• Detroit has focused on revitalization of the city’s core communities
and demolition of severely blighted areas. Detroit has narrowly
targeted investments in stable areas, to rebuild structurally sound
homes and create lively communities near economic and cultural
centers. The Midtown neighborhood is building on its strengths,
including Wayne State University and several hospitals, which in
turn generate demand for restaurants and other services.
• Detroit’s problems are vast in scale, however, with approximately
70,000 foreclosed properties in the city, 65 percent of which
remain vacant. NSP and State of Michigan funds have been
used to demolish thousands of foreclosed, burnt out, vacant and
dangerous structures within Detroit’s city limits. Although the need
for demolitions exceeds the funding sources available, Detroit
has made extraordinary inroads, demolishing more than 6,000
structures since 2008. Detroit Mayor Dave Bing has indicated that
the target is 10,000 by November 2013. At an average cost of
about $9,500 per demolition, including asbestos remediation, the
city has already completed over 3,100 demolitions with NSP funds
and expects to remove another 500.
Detroit Land Bank Authority
In 2008, Mayor Bing executed an Intergovernmental Agreement
between the Michigan Land Bank Fast Track Authority and the City
of Detroit, creating the Detroit Land Bank Authority (DLBA). The
DLBA focuses on strengthening Detroit’s communities by facilitating
development, stabilizing property values, promoting job creation, and
creating affordable opportunities for homeownership.
• The DLBA owns properties in 12 neighborhoods and has
prioritized two of them for rehabilitation and resale in the short
term. The DLBA has acquired 38 single-family homes in West
Boston Edison, thirteen of which are currently being rehabilitated.
The DLBA has also acquired 41 properties in the East English
Village neighborhood, 25 of which are scheduled to be
rehabilitated with NSP1 and NSP2 funding. Unfortunately, there
are insufficient subsidies available at present to rehabilitate all of
DLBA’s real estate holdings.

Use of NSP2 Funds outside the City of Detroit
• The City of Wyandotte, Michigan was awarded a total
of $8,131,796 by the Michigan State Housing Development
Authority and is using these funds to build new homes on vacant
lots. To ensure the houses are energy efficient, advanced building
and framing techniques and geothermal heating/cooling systems
as well as Energy Star appliances are being utilized to keep
monthly utility bills low.
• In Pontiac, Michigan, NSP2 funds were invested in Lafayette
Place, a $20 million redevelopment of an 80,000-square-foot
former Sears, Roebuck & Co. department store that was built in
1929. The building – which houses 46 new residential units, a
grocery store and a fitness center, was partially funded with $5.9
million in NSP2 funds from MSHDA. The project also benefitted
from New Market, Historic and Brownfield tax credits. The housing
units will consist of 46 one- and two-bedroom apartment lofts with
access to a green rooftop. The project is the largest construction
investment in downtown Pontiac in 30 years and should prove to
be a catalyst for future development in the area.
Hardest Hit Fund in Michigan
The Michigan Homeowner Assistance Nonprofit Housing
Corporation (MHA) oversees Step Forward Michigan, which
was launched in July 2010 and funded through a $498.6 million
allocation from the Administration’s Hardest Hit Fund. MHA
was selected to oversee Step Forward Michigan as a support arm
for MSHDA. Step Forward Michigan provides several programs
to assist Michigan homeowners who are at high risk of default or
foreclosure. These programs include: Principal Curtailment, Loan
Rescue, Modification Plan, and Unemployment Mortgage Subsidy
(unemployment and reinstatement assistance). Step Forward
Michigan provides twelve months of unemployment assistance
to qualified borrowers; they also provide up to $30,000 to cure
delinquent payments, escrow shortages, delinquent property
taxes, and/or delinquent condominium association fees to avoid
foreclosure; and up to $30,000 to enable a permanent loan
modification. The number of homeowners benefitting from the
program has continued to increase due to strong demand. For
additional information, see

• The land bank faces difficulties from low post-renovation appraised
values on many properties that tend to raise the originally
estimated subsidy needed per unit (a percentage of redevelopment
costs are often recovered upon sale). It is still typical for renovated
properties in Detroit to receive appraised values far below the
total development cost for acquisition and renovation. The DLBA
credits the city for supplying low-income affordable housing over
the years; however, they believe that it is now time to focus on
attracting more moderate and middle income families to improve
the city’s tax base.

Spotlight on the Housing Market in the Detroit-Warren-Livonia, Michigan MSA | Page 5

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