Detroit property values climb 30%, marking fifth straight year of growth, officials say

Detroit — Residential property values in the city climbed an average of 31% last year, marking the fifth straight year of growth, Mayor Mike Duggan announced Tuesday.

Officials said the figures are based on a review of the last two years of housing market sales. In comparison, Detroit's values rose 8% per neighborhood from 2020 to 2021.

Duggan said Tuesday that property taxes citywide are expected to go up 3%, "as long as you maintain your house." Over the past two weeks, 399,087 assessment notices were mailed out to homeowners.

While property values have steadily increased in the city, Duggan said homeowners are protected against large property tax increases because of a voter-approved constitutional change in the 1990s. Under state law, the annual increase in property taxes is capped at the consumer price index or 5%, whichever is lower. Those taxes get uncapped when ownership changes and are adjusted to the state equalized value the year following the sales transfer.

The mayor said 203 out of 208 neighborhoods saw values rise and the city will be mailing out notices of proposed assessment changes this week. The majority — or 91 neighborhoods — saw a 30% to 49% boost. Another 85 neighborhoods saw values increase 10% to 29%; 21 others had values soar more than 50%, he said.

Five neighborhoods lost value, but none greater than 6%, according to the city's calculations. The city assessor's office could not comment Tuesday night on the metrics used to compute the assessments or detail which five neighborhoods lost value. An area that lost value is near where the Gordie Howe International Bridge is being built, Duggan said.

“This steady rise in property value is a reflection of ongoing improvements in neighborhoods such as blight removal, park improvements, commercial corridor upgrades and other key city services,” Duggan said during the announcement at Detroit Public Safety Headquarters.

“Home values in nearly every neighborhood are rising and helping to build new wealth, without significant tax increases. These numbers show that while there is still a lot of work to do, the city’s revitalization has reached nearly every corner of our city.”

The Morningside community on the city's east side experienced a 25% increase in property value, while Pulaski in southwest Detroit and Green Acers in northwest Detroit climbed 26%, the mayor said. Warrendale on the far west side rose 27%, Russell Woods jumped 36%, Grandmont increased 47% and East English Village soared 63%, he added. 

To determine the assessments, the city examined market sales between April 1, 2019, and March 31, 2021, including more than 60,000 transfers. Of those, 14,200 met the definition of market value and were used to determine the 2021 assessment. 

Detroit Assessor Alvin Horhn on Tuesday noted the metrics used to compute the assessment follow the State of Michigan, the Appraisal Institute, the International Association of Assessing Officers, which adopted the standards, including "the most probable price, not the highest or lowest average, buyer and seller are typically motivated, a reasonable time is allowed for exposure to the market, requires an arm length transaction in the open market, a willing buyer and a willing seller with neither taking advantage of the other."

The mayor's announcement came three days after Detroit City Council President Mary Sheffield hosted a community forum to gather feedback for a compensation ordinance she hopes to draft to address hundreds of millions in overassessments in past years. 

Advocates have escalated calls for state and city leaders to investigate the ongoing "inaccuracy" and "inequity" in property tax assessments in Detroit since a January 2020 investigation by The Detroit News found the city failed to accurately bring down property values in the years following the Great Recession. As a result, Detroit overtaxed homeowners by at least $600 million over a six-year period, according to a Detroit News investigation. 

Duggan has said the gap between home prices and assessments was largely closed in 2014 when he took office. At that time, he has said, the city's residential values were in a tailspin and lost an estimated $3 billion in value since 2010.

To aid struggling homeowners, the mayor has noted he implemented a 22% cut in assessments his first month in office and further reductions in 2015.

"We've had to listen to nonsense recently that says Detroiters are being overtaxed today. You can see from this, that is just nonsense," Duggan said in response to critics of the city's assessment practices. "The truth is there was a time way back ... but today, our taxable value is way below the market value. The only way you're likely able to be overassessed today is if you bought your house in the last year."

In response to Sheffield's Saturday forum, Horhn said the city has spent millions of dollars modernizing its assessment process, and new assessments have been reviewed and approved by the State Tax Commission.

"No one is being overtaxed," Horhn added Tuesday. But he stressed: "We encourage taxpayers to take advantage of their rights to appeal property taxes."

Duggan's announcement Tuesday contained some "very troubling mistruths," said law professor Bernadette Atuahene, a member of the Coalition for Property Tax Justice, which focuses on researching overtaxation in Detroit

"Based on the data we have from prior years, we still have a situation here in Detroit where the lowest value homes are being illegally assessed," said Athuahene, adding the group will conduct a study based on the city's new data. "Averages look good, but that's because the higher values are being under-assessed and the lower values are being overassessed."

In November 2020, the council narrowly rejected a proposal by Duggan's administration that would have given residents potentially overtaxed before 2014 a priority in affordable housing, home-buying discounts and job opportunities. 

Duggan said he and Sheffield talked Monday about past overassessments. He said he's confident the administration and the council will "reach a solution that will work for everybody."

Next week, the city will begin its tax review process. 

"We will sit down with you, explain the process and explain any questions you have," Horhn said. 

Since 2018, the value of residential properties in the city has increased 60% overall, Duggan noted Tuesday. Detroit's residential property values now stand at $4.8 billion, an increase from a 2017 low of $2.8 billion, the city said. 

“This strong property value growth provides greater stability, not only in our neighborhoods but also for the city’s economy and revenues,” said Detroit's Chief Financial Officer Jay Rising.

Russell Woods Sullivan Area Association President Melvin Chuney said he's pleased to have stuck around in the same neighborhood because his home value has skyrocketed with neighborhood improvements.

"The development is just crucial around these neighborhoods," said Chuney, a retired Detroit police officer who purchased one of 1,100 homes in Russell Woods in 2013. "... I thank God to be here and to see this turnaround."

Homeowners are able to appeal the proposed changes over the next three weeks.

The city has extended the assessor review through Feb. 22 and the appeal process will take place remotely online, by letters, or email at assessorreview@detroitmi.cov or online at detroitmi.gov/aborappeal2022.

When challenging, residents should provide photos of the interior and exterior of their property, officials said. 

srahal@detroitnews.com

Twitter: @SarahRahal_