Detroiters are facing a man-made “eviction crisis” that’s pushing people out of the city and costing taxpayers a fortune, according to a newly released study on housing inequities.
The findings are outlined in a study that examines how gentrification, historic segregation, a lack of affordable housing and other intersecting forces have created deeply-rooted housing inequalities in Detroit. It concludes that more Detroiters are competing for fewer and more expensive rental units as more affluent people move into the city.
The $1 million study, commissioned by the Rocket Community Fund, tapped New York-based Stout Risius Ross to investigate the economic impact of a Detroit eviction defense fund. It was publicly released Monday as the Community Fund announced a $12 million commitment for a new city initiative that provides free lawyers to low-income tenants facing eviction.
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The City Council approved its Right to Counsel ordinance earlier this month. The Stout study provides an argument for the program’s potential to protect residents from eviction and save the City of Detroit millions of dollars in social services, but it also takes a broader look at city housing conditions.
“In order to appreciate Detroit’s present eviction crisis, it’s helpful to appreciate and study Detroit’s history, particularly the history of racist housing policies and practices,” said Neil Steinkamp, a managing director at Stout and lead author of the report.
“Eviction is a systemic issue, one that disproportionately impacts Black households in Detroit and female-headed households in Detroit, one that often impacts the Detroiters working hardest to make ends meet, one that causes trauma and crisis when tenants do not have assistance,” Steinkamp added.
There are some 30,000 eviction cases each year in 36th District Court. Stout found only 4% of Detroit tenants were represented compared with 83% of landlords, and a fully-implemented Right to Counsel program could prevent 6,419 Detroit households from being evicted each year.
Creating a path for residents to legal representation was framed as a vital step toward preventing homelessness and displacement. Stout estimated 90,000 Detroit residents are impacted by eviction each year, accounting for between 30% to 40% of all renter households.
“In an adversarial justice system, which we have here in the United States, nearly every landlord hires a lawyer to defend their rights and advocate on their behalf,” Steinkamp said. “However, tenants with low incomes are often not able to hire a lawyer and also cannot always navigate the complex court process or accommodate the court schedule, often having to choose between missing work for an entire day or multiple days, having to pay for childcare … and other costs associated with trying to respond to a court notice.”
The percentage of Americans living in homes they do not own is at its highest recorded point since 1965. In Detroit, renter-occupied households increased from 46% to 53% between 2010 and 2019.
Rental units are becoming more scarce as demand grows and supply shrinks. Only 5% of the city’s rental units were vacant in 2019, compared to 13% in 2010. Detroit Mayor Mike Duggan kicked off his third term with a massive campaign to demolish blighted and abandoned homes and to renovate others deemed salvageable. The Stout study flags demolitions as a contributing factor to the supply problem.
Most available housing (77%) in Detroit was built before 1960. People living in aging homes have a higher risk of exposure to respiratory health issues and are more likely to live in substandard conditions. The Stout study also shows Detroit has failed to enforce rental ordinances; just 4% of all rental properties have a certificate of compliance with the city.
“With a high rate of blight and abandonment in Detroit, opportunistic owners of these properties often lease them to low income tenants, notwithstanding the property’s substandard conditions,” Steinkamp said.
The study found residents of Detroit – approximately 80% of whom are Black – often cannot secure favorable home financing. Less than a quarter of all home sales in Detroit were financed with mortgage loans during 2019, which represents the smallest share among the country’s 50 most populous cities. There were no mortgages given in nearly one-third of Detroit census tracts during that same year.
The average value of a white Detroit resident’s home is approximately $46,000 more than the value of a Black-owned home, and $39,000 more than the value of a Hispanic-owned home. Stout researchers described the disparity as “a manifestation of Detroit’s housing market collapse and housing segregation.”
The study also draws a link between gentrification and housing insecurity. Researchers note that a significant increase in Detroiters earning more than $75,000, while households earning less than $25,000 decreased, likely means affluent newcomers are displacing low-income residents. It also suggests low-income households are either being priced out of Detroit’s rental market or displaced because of eviction.
Stout’s research points to eviction as a contributor to Detroit’s population decline. The firm analyzed 700 eviction filings in the 36th District Court from 2017 and found at least 12% of the Detroit renter households that experienced an eviction moved to a different city.
“One of the priorities of the administration is to grow the population and (we) want to not just grow, but we want to keep people who have been here in their homes,” said City Council President Mary Sheffield. “Having a program like (Right to Counsel) really stabilizes our neighborhood, and to me it shows that we care about the most vulnerable in our community. We don’t want generational Detroiters to leave our city. We want them to be a part of it and show them that we care.”
The council passed the ordinance to much fanfare, but some supporters were left wondering how Detroit will make the program sustainable in the long-term.
The city approved use of $6 million in federal American Rescue Plan Act funds for the first year. On Monday, Jennifer Gilbert announced the Gilbert Family Foundation would help sustain the program longer by contributing $4 million annually for three years for a combined total of $10 million each year. This comes up short of $16.7 million Stout estimates it will take per year to fully fund a Right to Counsel program.
Advocates have called on the city to contribute the full amount. Sheffield hopes findings in the Stout study will help the city encourage other philanthropic organizations to raise the remaining $6.7 million. The city needs a plan to replace federal COVID-19 relief funds that expire in three years.
Stout researchers suggest the city could expect to save $18.9 million annually in social safety net spending and realize an additional economic value of $39.9 million through eviction defense, for a total economic benefit of $58.8 million.
“We have the data, we have the argument to be able to advocate for this,” Sheffield said. “We’re just hoping that as we continue to build momentum and continue to talk about the impact that more people will step in and join a fight to fully fund it.”
One such battle could be brewing between Sheffield and the city’s Law Department. Detroit’s previous corporation counsel argued that the city could not use general fund dollars to support eviction defense. Sheffield disagrees.
“I don’t believe that the general fund should be off the table,” she said. “This serves a public purpose.”
Former Interim Corporation Counsel Chuck Raimi and Chief Financial Officer Jay Rising had argued that using general fund dollars to help fund the program would violate state law because it’s considered a private expense. But Sheffield said she views the Right to Counsel as a public use.
Sheffield said she’s in conversation with newly-appointed Corporation Counsel Conrad Mallett, who took over in April. The City Council may also choose to recruit representatives in Lansing to change state laws that are holding back general funds, she said.
Mallett spoke Monday during the Gilbert Foundation press conference, saying the Stout study demands a “moral and ethical response.”
Monday’s announcement came a few weeks after the Gilbert Family Foundation announced it would direct $10 million toward a home repair fund for Detroiters. Dan Gilbert, the billionaire founder of Rocket Mortgage, who owns a vast swath of Detroit real estate, previously pledged to invest $500 million in Detroit neighborhoods over the next decade.
Laura Grannemann, vice president of the Rocket Community Fund and executive director of the Gilbert Family Foundation, said the Stout study shows there’s more work to be done.
“We will continue making those foundational investments,” Grannemann said. “That belief that we can be a city that implements policy that makes decisions collectively that will support all income levels in their housing journey is really at our core.”