Sales Price Of Properties Sold At Detroit Tax Auctions Doubles
Average price in Detroit rose from $2,000 to $5,000 in seven years
The Wayne County Treasurer auctions off properties that have been foreclosed on for lack of tax payments, and the average sales price of those properties more than doubled between 2009 and 2016.
The average sales price of Detroit properties foreclosed on rose each year between 2009, when it was $2,000, and 2016, when it was $5,000. Even so, the county’s gross proceeds from the auctions have been going down since 2014 as the number of properties sold has been decreasing, a trend that started in 2012.
A majority of the properties sold at these auctions were either vacant or considered unoccupied. In each year between 2010 to 2016, however, at least 30 percent of the properties were occupied at the time of the auction. In 2009, only 3 percent were occupied.
If a property’s owner does not pay the taxes (and fines) due during a three-year period, it is likely that the county will sell it at a public auction.
Between 2010 to 2017, the median sales price of a residential property in Detroit increased from $9,513 to $26,000 and the average assessed property value dropped from $21,391 to $10,309.
Jerry Paffendorf, CEO and co-founder of the property data and mapping company Loveland Technologies, believes Wayne County’s delinquent property tax auctions will be worth watching in 2018.
“First, the county and city have been increasing efforts to divert foreclosable properties out of the auction, even removing many properties that haven’t paid any taxes,” Paffendorf said in an email. “Second, there’s a growing recognition that many points of the foreclosure and auction process are unfair, illegal, or counterproductive.”
From 2011 to 2015, one out of every four properties in Detroit entered the foreclosure process due to unpaid property taxes, according to a paper written by Bernadette Atuahene, a professor at Chicago-Kent College of Law, and Timothy Hodge, a professor of economics at Oakland University.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.