Who's at Risk of Tax Foreclosure in Detroit as of April 15th, 2022

The number of occupied homes considered "Likely Foreclosed" by the Wayne County Treasurer is falling much faster than the last “normal”¹ tax foreclosure auction in 2019.

Here’s how the figures for occupied Detroit homes at risk of tax foreclosure have changed from March 9th, 2022 to April 15th, 2022²:

Compare the chart above to the change seen in 2019 — the last year with a full tax foreclosure auction — between March 12th, 2019 and April 8th, 2019:

Just about the same length of time and the same period of time around the April 1st deadline at which point properties are legally tax foreclosed.

In 2022 however, the number of homeowners “likely foreclosed” fell at double the rate of 2019 in that one month window, and to much lower absolute numbers than in 2019. There was also a much larger drop in the number of renters living in homes at risk of tax foreclosure from mid-March 2022 to mid-April 2022 vs. the same time in 2019.

A couple reasons as to why, starting with homeowners.

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Thoughts on Why Homeowner Numbers are Falling:

At the end of March, the Wayne County Treasurer announced that homeowners who owed property taxes for the 2017 tax year or later would not be foreclosed in 2022.

At the time of the announcement, the 2,712 homeowners at risk of tax foreclosure on March 9th, 2022 had fallen to just about 2,000. With the Treasurer’s announcement, another 1,200 immediately exited foreclosure risk. As I wrote previously, that left 800 homeowners still at risk in 2022 because they owed property tax debt prior to 2017.

As of April 15th, that 800 figure had fallen to the 471 homeowners still considered “likely foreclosed.” I arrived at that number by combining USPS vacancy data from Regrid with principal residence exemption data from the City of Detroit and the Wayne County Treasurer’s “likely foreclosed” list.

So, about 300 additional homeowners with tax debt older than 2017 took steps to get out of tax foreclosure risk between the Treasurer’s end of March announcement and April 15th.

Typically, this is the point where I would say that when tax foreclosure numbers get this low and you’re looking at properties with tax debt this old (again, the only homeowners still at risk are those with debt from 2016 or prior), you really need to start doing door-to-door work to see which of these properties are actually occupied. The combination of US Postal Service vacancy data from Regrid as well as City of Detroit assessor’s data that I’m relying on to determine occupancy is good, but not perfect.

And yet, as I’ve been spot checking a couple dozen of these still-likely-foreclosed homes on Google Street View and Mapillary, I’ve yet to find one that doesn’t look occupied:

This home on Warwick Street looks pretty occupied as of April 2021.

2019 saw the lowest total for owner occupied homes in a tax foreclosure auction, with about 250 ultimately tax foreclosed:

Chart of occupied tax foreclosures via Rocket Community Fund’s 2020 Neighbor to Neighbor report.

As you can see from the charts at the top of this post, there are far fewer owner occupied homes still at risk of tax foreclosure in mid-April of 2022 (471) than there were in mid-April 2019 (1,653).

As long as there continue to be opportunities at the Wayne County Treasurer’s office for homeowners to get into programs like HOPE property tax exemptions and MIHAF, then we should see even lower totals in 2022 than in 2019 (hopefully approaching zero).

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Thoughts on Why Renter Numbers are Falling:

At the start of the year, it was clearly tenants who were at greater risk of tax foreclosure in 2022 than homeowners.

There’s been enormous progress on the homeowner side of tax foreclosure, but there were a lot of landlords who’d pulled way back on delinquent property tax payments amidst the pandemic and, entering 2022, many tenants were at risk of winding up in a tax auction because their landlord wasn’t paying property taxes.

Still, I suspected it was likely landlords would pick up the pace on delinquent tax payments as the deadline neared. Why? Because as I showed in my last post in The Chargeback, property values are WAY up in Detroit in 2022. Why would these owners let their properties fall into tax foreclosure when they could likely just sell them?

Even if the home is in terrible condition, right now, there’s probably a market for it. Just look at the places I’ve been seeing rehabbed in corners of the city where these homes wouldn’t have been touched just a few years ago:

Right now, it looks like landlords have indeed picked up the pace on delinquent tax payments. Though in mid-March 2022 there were 400 more occupied rental properties at risk of tax foreclosure than the same point in time in 2019, by mid-April 2022 there were 1,000 fewer occupied rental properties at risk of tax foreclosure than there were in mid-April 2019.

1. The 2020 auction was canceled altogether due to the pandemic, and the 2021 auction included only vacant properties and vacant land.

2. I’m going to focus this post only on occupied homes at risk of tax foreclosure and exclude any discussion of the overall number of properties at risk of tax foreclosure but, for the record, as of April 15, 2022 the Wayne County Treasurer reported 4,689 Detroit properties *of all kinds* “likely foreclosed.” For point of comparison, on April 8, 2019 the Wayne County Treasurer reported 8,038 Detroit properties of all kinds “likely foreclosed.”