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Study: Detroit continues to over-assess its least valuable properties

Brick, single-family homes in Detroit
Paulette Parker
Michigan Public
Passing down homes within a family is one of the common ways generational wealth is built in the U.S. When homeowners don't leave a will and their property doesn't go through probate, a home can become an heirs' property, increasing the risk the family will lose the home.

Advocates for property tax fairness said Monday that a new academic study is evidence that Detroit continues to over-assess its lowest-priced homes.

The University of Chicago study looked at recent home sale prices and compared them to how the city assessed their value. Assessments are important because they form the basis for property tax rates.

By Michigan law, cities are not allowed to assess homes at over 50% of their market value. But the study concluded that Detroit continues to do so, and disproportionately to the lowest-value homes.

University of Chicago professor Christopher Berry was the study’s lead author. He’s done ratio assessments of home sales prices — market value — versus assessed value in Detroit and other cities, and said Detroit is not nearly as bad as it used to be on this front. In the wake of the Great Recession, systemic over-assessment was a widely-acknowledged issue that led to inflated property tax bills and helped fuel Detroit’s tax foreclosure crisis.

“There have been substantial improvements over the last few years, and I think it's important to acknowledge the progress that's been made,” Berry said. “Nevertheless, significant problems remain with respect to the lowest-priced homes.”

Berry said that means Detroit’s ratio is “regressive” — with lower-value homes over-assessed at much higher rates than higher-value properties. His analysis showed that based on Detroit’s most recent data, the city over-assessed 65% of the least expensive properties, compared to 11% of the most expensive ones.

“In Detroit, we now have evidence that the lowest valued homes till this day continue to be systematically over-assessed. And we are here to put a stop to it,” said Bernadette Atuahene, a leader of the Coalition for Property Tax Justice.

Mayor Mike Duggan’s administration acknowledges that Detroit had a serious over-assessment problem in the past. But administration officials have said that was largely corrected by cleaning up the city assessor’s office, and completely a citywide parcel-by-parcel re-assessment process in 2017. They vehemently deny that the problem is ongoing.

But Atuahene and other advocates are pushing the Detroit City Council to take action. They say the council should invoke relevant portions of the city’s property tax reform ordinance, which was passed late last year.

The group is supporting two proposed resolutions before the council. One would require the city assessor to do a 30% across-the-board reduction of assessments for homes valued at $34,700 or less, while the other would call on Wayne County Treasurer Eric Sabree to remove all owner-occupied homes in that same category from this year’s property tax foreclosure auction.

“We need systemic change, and that systemic change came with the property tax reform ordinance passed last November,” Atuahene said.

At least one council member, President Mary Sheffield, appears to be onboard with those resolutions, which the council could take up as soon as Tuesday.

“The most egregious part of the systematic over-assessment of properties in Detroit has been this issue of regressivity, which is when the low-valued homes are assessed at a higher percentage of their true market value than our high-valued homes,” Sheffield said in a statement. “While we recognize the assessor's job is difficult, the stakes are too high to sit idly by while the city while the city's lowest-valued homes are consistently over-assessed.”

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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