Sales of previously vacant homes are steadily racking up on the Building Detroit auction site.
The house at 18631 Albion Avenue in Detroit is a "good-looking 1,300 sq. ft. brick bungalow." The three-bedroom, one-and-a-half-bath home in Detroit's Osborn neighborhood sits between two parks, Optimist-Parkgrove Playground and Bessy Playground. So says the Detroit Land Bank Authority, in a listing on the Building Detroit auction site. "Upgrades are needed in the kitchen and bathroom," the listing reads. "The garage is falling apart and tuck pointing is needed on the exterior of this house."
The house has been stripped of its copper, its foundation features minor visible cracks, and its water heater is broken—but 18631 Albion is now sold. After 52 bids over the course of six hours on June 1, the home sold to user "macaroni" for $5,400.
After a month and a half of bidding, Detroit's Neighbors Wanted program is starting to bear fruit. In a little more than two weeks' time, the program will arrive at its first major deadline—the 60-day mark whereby auction winners must close on properties sold for under $20,000.
Since May 5, Detroit has auctioned off 60 properties, garnering more than $1.2 million in auction pledges at the time of this writing. One of them, a three-bedroom home in MorningSide, sold on the opening-bid price of $1,000. The interest was so great in a 3,000-square-foot, four-bedroom, four-bath home on Chicago Blvd., a block away from Woodward Ave., the website crashed. After the reschedule auction opened, it sold for just shy of $100,000 following 229 bids.
All told, it's a drop in the bucket. Neighborhood residential structures make up 98 percent of the blighted structures in Detroit, according to a report put out by the Detroit Blight Removal Task Force in May. The Task Force, which was appointed by President Barack Obama, is also responsible for the Motor City Mapping project, an effort to catalog and map Detroit's blight.
Of the roughly 75,000 blighted residential structures identified by the Task Force, about half need to be removed right away—some through deconstruction and recycling, most by demolition. The Task Force estimates that blight removal will cost the city between $1 and 2 billion.
Nevertheless, by seizing vacant properties and auctioning them online, Detroit is starting in on the work that is only supposed to happen after the blight is removed: restoring, or at least stabilizing, housing values. Back in April, the city moved on dozens of vacants, posting notice that negligent owners needed to get in touch or the houses would be taken.
Those who win homes through the auction are required to repair them. This isn't a tool for speculators: 10 percent of the bid price is owed within 72 hours of the close of auction, while the buyer must close on it within 60 days. (If the purchase price is under $20,000, that is; buyers get 90 days for homes that cost more than $20,000, such as that gorgeous home at 115 Chicago Blvd.)
After 30 days from closing, the buyer needs to cough up construction contracts for property rehabilitation (or receipts for construction materials, for DIY projects). Finally, an auction buyer needs to show a certificate of occupancy within 6 months of closing. And someone needs to actually live there.
While none of these milestones has been reached so far, the early signs are encouraging. According to the Detroit Free Press, Detroit Land Bank deputy director Dekonti Mends-Cole says that the agency is targeting homes near amenities. That doesn't necessarily mean homes in (say) the popular Boston-Edison Historic District, though; the Land Bank is moving houses in working-class neighborhoods, too.
Again, selling abandoned and tax-foreclosed homes isn't a single solution, given the magnitude of Detroit's vacancy problem. But it does put (ostensibly) tax-paying home-owners into homes. Put enough of them into homes in a single neighborhood, and the propensity for abandoned homes to beget more abandoned homes goes away. (Or starts to, at least.) For the most part, the homes are going for well over the median listing price ($9,900 per Zillow) and approaching the median sale price ($26,500).
One of the major boons of the program may be the Detroit Land Bank Authority itself. The agency, which the Free Press describes as "a tiny, understaffed and mostly ineffective little agency since its creation by the City Council in 2008" is now the "spearhead" in Mayor Mike Duggan's redevelopment program. This agency could follow in the footsteps of New York's Department of Housing Preservation and Development—a bureaucracy that successfully put tenants into houses abandoned by tax-delinquent landlords during the 1960s and 70s, especially through the innovative Division of Alternative Management Programs.
But even just focusing on 60 homes sold: That's 60 homes sold. Sure, one or two of them look like this:
A seven-bedroom, five-bathroom Tudor with all the gingerbread intact isn't a tough sell at $70,000. But these are by and large homes that will go to people who plan to live in them. That has an impact on many more people than 60 homeowners.