The Quicken Loans founder talks about a partnership with Home Depot to rehab 65 homes in Detroit. Matt Helms/Detroit Free Press
Matt Helms, Detroit Free Press 6:58 p.m. EDT August 26, 2015
Detroit Mayor Mike Duggan and businessman Dan Gilbert at a news conference in March 2015.
(Photo: Ryan Garza/Detroit Free Press)
Quicken Loans chief Dan Gilbert and Mayor Mike Duggan said today that a program to renovate as many as 65 abandoned but salvageable homes in four Detroit neighborhoods will boost home prices across the city.
Quicken partnered with the home improvement store Home Depot and the Detroit Land Bank Authority on the program, with Quicken donating $5 million to the effort targeting homes in the Bagley, Crary-St. Mary’s, College Park and Evergreen/Outer Drive areas. The first home, at 18652 Monica in the Bagley neighborhood, will have an open house 11-5 Saturday and will be auctioned next week on the land bank’s web site, www.buildingdetroit.org.
Quicken is donating $5 million toward the effort, and that money will cover any shortfalls between what the Detroit Land Bank spends to rehab the houses and the actual sale prices. If homes sell for more than the cost of repairs, the excess money goes back into the program, said land bank spokesman Craig Fahle.
Home Depot is heading up the contracting and repairs, hiring Detroit companies and workers to help out, officials said.
Gilbert said Detroit’s neighborhoods, particularly stable ones like Bagley, are ripe for investment, because the homes are worth more than they’re selling for. He said Detroit’s property values have stayed artificially low because mortgage companies are reluctant to lend in the city, which was hammered by the recession and the national foreclosure crisis.
Gilbert said the aim of the Rehabbed and Ready program is to get the homes move-in ready, with the goal of selling the homes at higher prices that will in turn help boost appraisals when other people go to get a new mortgage or refinance existing loans. Noting that home appraisals generally depend on recent sales of similar homes, Gilbert said the rehabbed homes sold through the land bank will have a snowball effect on appraisals.
“That’s the idea: to get stability into the marketplace and get us over the hump,” Gilbert said. “We think this program will get us there.”
Gilbert predicted people would be surprised by the impact that selling two rehabbed homes a week will have on property values in Detroit, noting that doubters five years ago were dismissing the idea of a resurgent downtown.
Duggan said that while suburban property values have largely rebounded back to 2007 levels or higher, Detroit’s are still lagging at 50% below prices from eight years ago. Because of that, appraisals are staying low, making banks leery of lending to the point that nearly 90% of home sales in Detroit are cash transactions.
Duggan called the Quicken Loans-Home Depot partnership a way to prove that renovated homes in Detroit are worth more than prevailing sale prices.
“I’m pretty sure if we succeed on this like we did on this house, you’re going to see a lot of other people follow Dan Gilbert,” Duggan said. “First they followed him downtown, and I hope in the very near future they follow him into the neighborhoods.”
The home renovations may help begin to help address criticism that Detroit’s revitalization has favored downtown and Midtown and not other neighborhoods hit hard by unemployment, the recession and foreclosures.
More information on the program is available at www.buildingdetroit.org.
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