January 24, 2019
Commercial property values in Detroit rose 35 percent between 2017 and 2018 after the city completed its first citywide reassessment of commercial buildings in decades, Mayor Mike Duggan said Tuesday.The overall value of commercial property in Detroit rose $2.96 billion to more than $4.5 billion, according to data from the city assessor’s office.Industrial property values made an 18 percent jump between 2017 and 2018, from $513 million to $629 million, according to the assessor’s office.The rising value of retail and office building property in downtown, Midtown and along mainstay commercial corridors in Detroit’s neighborhoods came as residential property values rose an average of 12 percent across the city, according to the mayor’s office.Overall, Detroit’s total property values rose 21 percent in 2018 to $10.2 billion, which is comparable to citywide assessments from 2011, according to the assessor’s office.The increased property values reflect what city officials are hearing from real estate agents as the city attracts new businesses and residents, Duggan said.
“I always thought that we would see double-digit increases,” Duggan said Tuesday. “But it’s one thing to think it should be happening and it’s another thing when the assessor walks into your office and shows you the map that it’s happening all across the city.”However, because of state constitutional caps on property tax growth, residential property tax bills will rise by an average of just 1.02 percent this year, Duggan’s office said.The same constitutional limits on taxation apply to commercial and industrial property tax bills as well when they get mailed to property owners in July.The cap on taxable value is lifted when a home or other property is sold.Growth in residential property value — fueled by 11,000 transactions in 2017 and 2018 — represents a $400 million increase citywide and follows a modest 5 percent increase in residential values between 2016 and 2017, city data shows. The growing property values in Detroit are partly a result of a four-year citywide reassessment following Detroit’s 2013-14 bankruptcy that dramatically lowered the taxable value of residential, commercial and industrial property in Detroit.
Those reassessments better reflected the true value of homes and long-abandoned commercial buildings following 17 consecutive years of steadily dropping property values, including a $1 billion drop in total residential home values between 2013 and 2014.Detroit’s 263,000 residential properties assessed at a citywide value of $3.4 billion, up from $2.8 billion in 2017. In 2008, the city’s housing stock was valued at $8.8 billion in assessed value.The majority of Detroit’s neighborhoods — 100 of 194 — saw average residential property values increase between 10 percent and 20 percent. Approximately 52 city neighborhoods had residential property value growth ranging from 1 percent to 10 percent, according to the assessor’s office.Two dozen neighborhoods in the city saw average residential property values grow by 20 percent to 40 percent.The fastest-rising residential property values in Detroit were in Midtown and Brush Park, which were the only Detroit neighborhoods to see values spike more than 40 percent, city data show.Neighborhood redevelopment was the topic of discussion at Tuesday’s Detroit Economic Club luncheon, where Duggan spoke on stage alongside Chemical Bank Chairman Gary Torgow and Alicia George, owner of Java House and Detroit Artist Village in the Old Redford neighborhood on the west side.Torgow said the rising property values are creating comparable housing sales data, enabling bankers to write mortgages in Detroit again. A half-decade ago, “you couldn’t get an appraisal” needed to get a mortgage, he said.
“Today, we are seeing a tremendous surge of opportunity, which is only good for the profitability of companies and banks,” Torgow said.Torgow, a native of Detroit, recently quarterbacked a coalition of seven corporations that each donated $5 million to the city’s Strategic Neighborhood Fund to spur reinvestment along commercial corridors.“If you’re in Detroit and you want to succeed in Detroit, the community has to succeed around you,” Torgow said.Detroit had approximately 1,200 residential mortgages in 2018, four times as many home loans than were issued four years ago, Duggan said.“We ought to have 3,000 or 4,000 mortgages a year,” the mayor told reporters. “We’re not where we need to be. But I think this is going to continue to shift the market in a healthy direction.”Just 16 of Detroit’s 194 neighborhoods saw an overall decrease in property values last year. Those ranged from 1 percent to 15 percent declines, according to the assessor’s office.Detroit spent $8.25 million reassessing all residential, industrial and commercial parcels in the city, said city assessor Alvin Horhn, Detroit’s deputy CFO.
Rising city assessments — and tax bills — typically give rise to more appeals from property owners.
Read Full Article From Crain’s Detroit Business Here