The Detroit Land Bank Authority’s (DLBA) Rehabbed & Ready program received good news recently in the form of a joint $5M new investment from the Rocket Community Fund, the philanthropic arm of Quicken Loans' Rocket Mortgage, and the City of Detroit. The infusion of funds will support an expansion of the Rehabbed & Ready program, and was awarded in large part thanks to a positive program assessment in a report by U-M’s Ginsberg Center. The report, “GOOD DEEDS: Community - minded intervention to strengthen the Detroit housing market is working, according to U-M analysis”, provided clear evidence that the program was effective.
The Good Deeds report was authored by U-M faculty Chris Mueller from the Ross School of Business and the Center for Finance, Law & Policy’s (CFLP) Detroit Neighborhood Entrepreneurs Project (DNEP), and Paul Fontaine, Taubman College of Architecture & Urban Planning. The authors were also supported by a research team that included Ford School research assistants David Sernick (MPP ‘20) and Sharanya Pai (MPP ‘21). The report found that during the program’s first three years, median home sale prices grew 11.5% more per year in Rehabbed & Ready neighborhoods than in Detroit neighborhoods without the program. In addition, the study found that the prevalence of mortgages grew 5.6% each year in Rehabbed & Ready neighborhoods, reaching 42.2%, nearly twice the rate of the city overall at 21.6%.
The Rehabbed & Ready program works to rehabilitate land bank-owned single-family homes in four west-side Detroit neighborhoods, which were chosen because of their poor housing stock and an appraisal gap that made it difficult for potential buyers to finance a home following the housing crisis. The DLBA oversees renovations, turning blighted properties into move-in ready houses complete with all-new mechanical, electrical, and plumbing systems. Through a partnership with Emerging Industries Training Institute, the program conducts renovations while also developing local talent through skilled trades education for community members. As a result, each property creates job opportunities and builds a skilled trades workforce for local contractors. Since 2015, the Rehabbed & Ready program has rehabbed and closed on the sale of at least 85 homes, with at least 40 more in the renovation pipeline.
“It took a philanthropic effort, including selling rehabbed homes at a loss, to jump-start mortgage-backed sales in neighborhoods,” said Mueller. “Once that happened several times, appraisers and banks were then able to start identifying what a market value is for a fully renovated home. And once that starts happening then private investors can start investing again, and more mortgage-backed buyers can start getting mortgages for surrounding houses in that neighborhood.”
"I feel the program has proven its value," said DLBA Executive Director Saskia Thompson to the Detroit News. "It was validating to see what we thought was happening was truly happening.”
Detroit Mayor Mike Duggan was similarly pleased with the findings, noting the benefits the program brings on increasing affordable homeownership in the city, and stabilizing home values.
“The Rehabbed & Ready program has made affordable homeownership possible for a lot of Detroiters who may not have been up to the challenge of renovating a vacant Land Bank house themselves,” said Detroit Mayor Mike Duggan via the Michigan Chronicle. “Scaling up this program will create this opportunity for more residents across all Strategic Neighborhood Fund neighborhoods while reducing blight and stabilizing property values.”
With the proof of concept demonstrating a positive result, the additional funds will be used to scale up the Rehabbed & Ready program to impact 10 neighborhoods across Detroit through DLBA’s Strategic Neighborhood Fund. The program’s new goal will be to foster a pipeline of at least 200 homes for rehabilitation and sale through the effort.
Read the full report of the Rehabbed & Ready Program prepared by the U-M team, “GOOD DEEDS: Community - minded intervention to strengthen the Detroit housing market is working, according to U-M analysis”, here.