Detroit sees more home mortgages in April than in any month during the past 10 years
- Multi Listing Service (MLS) tracking shows 140 mortgages last month, the most in any month since 2008
- Mortgages have risen annually from fewer than 500 in 2014 to nearly 1,300 in 2018
- Detroit Home Mortgage program helping more Detroiters receive mortgages, become home owners
The City of Detroit saw more home mortgages made in April than it has in any other month in the past decade, according to data from the Multiple Listing Service (MLS), which tracks home sales. Last month, MLS recorded 140 mortgages in Detroit, compared to 97 a year earlier. The last time the city saw more than 140 mortgages in a single month was 2008, prior to the Great Recession.
The April numbers parallel a larger trend of more mortgages being made in the city. The number of mortgages issued to Detroit home buyers each year has more than doubled since 2014 and continues to grow as Detroit’s single family housing market becomes more stable over time. In 2018, there were 1,271 mortgages issued to home buyers in the city, also the most since the housing market crash of 2008, according to MLS. The last time more mortgages were issued in Detroit was 2007, when there were 2,248.
“This growth shows that as property values continue to grow in our neighborhoods, sales are more robust and lenders have enough comparable sales to justify making a mortgage,” said the city’s Director of Housing & Revitalization, Donald Rencher. “More mortgages being made only further increases lender confidence and opens the door to even more mortgages.”
In 2018, 90% of Detroit’s nearly 200 neighborhoods saw an average 12% property value increase, equating to a combined increase in value of more than $400 million.
Detroit Home Mortgage program helps drive growth
A major driver of the increase in mortgages has been the Detroit Home Mortgage program, which Mayor Mike Duggan launched in 2015 in partnership with five banks: Huntington, Flagstar, Chemical, FirstMerit and Liberty. The year before, there were fewer than 500 mortgages issued in Detroit.
The goal of the Detroit Home Mortgage program was to address the issue of when “the owner qualifies for a mortgage but the house doesn’t.” To do this, banks allow buyers to finance $75,000 over the appraised value of a home to address market shortfalls. The program is available for home purchases, as well as refinances and homes that require significant renovations.
Through the DHM program, banks offer mortgages to any owner that meets the income requirements, however many entire neighborhoods are eligible based on its average income.
The Detroit Home Mortgage program gives two loans to borrowers to finance a home purchase: One to cover the appraised cost of the home, and one to cover the "appraisal gap." In Detroit – and other cities with depressed housing markets – a home may be listed at $90,000, for example, but only appraise for $80,000. Through Detroit Home Mortgage, a borrower would obtain a loan for $80,000 and a secondary loan for $10,000 to cover the financing. (Regardless of how much the home appraises for, the secondary loan has a limit of $75,000.)
Home Mortgages in Detroit by year