|
I'm curious about this statement. From what I recall of state law, the houses State Equalized Value would fall to 50% of the purchase price of the home assuming it is not a foreclosure. In the case of foreclosure, fighting a over-valued home (an experience I only have outside of the city) is pretty easy. In addition, in Michigan, a homeowner's SEV increase is capped per year until the property changes hands (known in these parts as Proposal "A", the third rail of Michigan politics). I'm not calling you out or anything. If you could explain that in greater detail or have a reference, I'd be interested to understand since I know some great, honest, giving people who also happen to be lawyers who would love to use their skills to help the city. Before I got to Detroit, I researched neighborhoods, house prices, etc. I was seriously considering buying a house. The nearest RV park to Detroit is 43 miles away, so I was considering buying a house to park at for three months, while doing some repairs and such, and either putting it in the hands of a rental agency when I left (coming back for a month or two each summer in the future), or simply putting it back on the market while living there (this was before I had actually been there and knew I didn't want to live in Detroit). But, every time I found something promising, I'd check the backtaxes situation on the property using Detroit's own property lookup tool and find that $3000 to $9000 was often owed on the property, and that annual property taxes were usually $2000 and up. I was looking at houses in the $3000-15000 range, as that seemed to be what it cost to get a block or two over from some of the seemingly recovering areas. The purchase price seemed to have no relation to the property taxes, and sometimes the cheapest houses had the highest tax rates (and the most backtaxes owed, which explains the low sales price). I don't know much about the law or the process of correcting overvaluation. But, if it's as easy as you say, why have none of the people selling these properties gone to the trouble to get the rates fixed and adjusted for past taxes? These are insane taxes for property with such low value. I paid about $3000/year in property taxes on a house in Austin several years ago, which had a valuation orders of magnitude more than anything I was looking at in Detroit (and Texas has no state income tax, so has very high property and sales taxes, relatively speaking). If it is actually easy to get the valuation corrected, and start paying reasonable property taxes in Detroit, then there are many bargains to be had. But, some folks were giving away houses for free, because they had more in backtaxes owed on the property than it was conceivably worth (even compared to other dirt cheap houses with backtaxes owed), for example. Seems to me that things are badly broken in Detroit. I'm not an expert on how to save cities, by any means, but I don't think things are going right in Detroit, and I feel like punishing people who might be considering buying some of those horribly depressed properties by charging stunningly high taxes is gonna have to have unintended consequences. Thanks for the history lesson on Detroit and its mayors. I planned to spend some time on the ground there to get a feel for the place, but I knew relatively quickly Detroit was not for me, so only stayed two weeks. Part of the problem was weather...it was already colder and wetter and rainier than I like, even in early September when I was there. So, I didn't really learn much about the place. I checked out Dally in the Alley, the jazz festival (which got shut down due to weather minutes after I arrived downtown), did some bike exploration (never at night after that first day, and never in areas that seemed at all sketchy), and then drove south. Detroit has its charms, but nothing to make up for the brokenness of the city. I didn't really want to say it, since my experience is so limited, but during my short time there, I just couldn't see how Detroit could pull out of its nose dive, despite many well-meaning people in Detroit who'd like to improve things. Your closing comments seem to support this theory. My research into buying property, and then the research into why property taxes could be so outrageously high on such low-priced properties, led me to realize that Detroit is constantly on the edge of utter bankruptcy, supporting infrastructure that was designed for a big city at its prime on revenues of a poor small city. It just doesn't add up to any sort of good resolution in the next decade or two, as far as I can tell. Given the illiteracy rate, the poverty rate, and the unemployment rate, in the city, it looks destined to dig itself further into the hole it's in rather than climb out. I'd love to see that proven wrong, and there have been a number of really cool films and articles about Detroit's renaissance as an artistic mecca in recent years...but, it looks like a long climb still remains. |
I hadn't thought at all about back taxes. That's an interesting point and one that I think could be overcome, but I'm not a lawyer.
why have none of the people selling these properties gone to the trouble to get the rates fixed and adjusted for past taxes
I believe I can take a stab at this. The SEV is not able to be corrected until after the home is purchased and the state assessment is done. When I bought my first home, my father referred to it as the "surprise envelope" (as in, "You may already have won the Publisher's Clearing House!"). The back taxes situation is something you can research and can insure against (though, I'm willing to bet it's far more costly in the city limits). But I think you summed it up the best. Who would want to go through this trouble? You did the research and drew the conclusion that it wasn't worth it. Once you have to bring a lawyer in, unless they're doing so for charitable reasons (and I know a few that do just this), it's not worth the money. Even free, it's not worth the time fighting the assessment/treasury.
Detroit has its charms but nothing to make up for the brokenness of the city
Yes. And I'm sad to say that I completely agree with you.
EDIT: The RV park is 43 miles away was a quote from the original and I forgot to add emphasis to that point so it seemed like I was quoting much more than I was.