In Detroit’s housing market, rentals may be outpacing owner-occupied properties

A new study commissioned by Outlier Media shows Detroit’s rental housing market may have changed significantly in the past few years. There are now more rentals in the city — and they make up a bigger share of the city’s housing market overall when compared to an analysis in 2021.

Rental units now appear to make up about 60% of the housing market.

Data Driven Detroit undertook a comprehensive data analysis of the city’s rental landscape as part of a larger Outlier reporting project. Preliminary data from that study show significant changes over a relatively short time. The last time Data Driven Detroit did this kind of analysis was in 2021.

Stephanie Zarb, a program manager at Data Driven Detroit, did stress that these results are preliminary. The organization plans to continue its analysis to confirm that there has in fact been growth in this part of the housing market.

There are 9,567 more residential units in the city, or 5% more, when compared to a count in 2021, which indicates new construction and formerly vacant properties being returned to productive use. That’s good news for a city that does not have enough affordable housing and has struggled to grow after years of population loss.

There were 82,077 rental properties in the city in 2021, and there are 124,049 today, an increase of about 51%. That growth has flipped the proportion of the rentals in the city, which are now 62% of the market. They were 43% of the market in 2021.

This is less good news for a city where Black residents in particular are still looking to rebuild wealth through homeownership after widespread overassessments of homes by the city and tens of thousands of resulting tax foreclosures by the county during the 2010s.

The preliminary data do not contain occupancy information for these homes. If many of the rentals are unoccupied, it is possible the number of homeowners and renters in the city is closer to estimates from the past few years, when they have been closer to half-and-half .

This stands in contrast to census estimates from a few years ago , when owner-occupied homes made up a slight majority of the city’s housing market. That edge has been erased in current census estimates , but the new study shows an even more dramatic increase in rentals.

Zarb said local data can sometimes provide more accurate information than federal sources because they can combine local expertise and knowledge of available local datasets.

To identify likely rental properties, Data Driven Detroit uses several steps. The firm’s method involves beginning with city assessor data and removing demolished, industrial and tax-exempt properties, properties owned by the Detroit Land Bank Authority, and properties the U.S. Postal Service categorizes as “long-term vacant.” The firm then adds parcels with rental registrations. This is followed by more analysis. For example, one of the data points the firm looks for is whether a property owner has a different address than the property itself.

“These data estimates seem to confirm what we see from the US Postal Service and utility companies, which is that the City of Detroit is growing in population,” said John Roach, the city’s director of media relations, in a written statement to Outlier. Roach added that 2,000 new apartments have been built in the past eight years , many of them as affordable housing.

“While the number of new rental units has grown faster than homeownership numbers, we also are making strides there,” he continued, mentioning the city’s new down-payment assistance program and a program that helps housing-insecure Detroiters buy homes owned by the Detroit Land Bank Authority.

The percentage of residential rental properties owned by businesses has stayed relatively constant since 2021. There are 9,140 more residential properties owned by business entities than in 2021. The share of the rental market owned by businesses is 23%. It was 24% three years ago.

The method used by Data Driven Detroit to determine corporate ownership is conservative. Only properties with an owner name that ends in “LLC” or “INC” are counted. For example, Gastón Muñoz is a landlord with such a significant number of properties and blight violations that Detroit City Council is exploring ways to take action against him . One of the companies Muñoz owns is Detroit International Holding LLC. But Muñoz often omits the “LLC” from the company name when registering properties, meaning not all his rentals are counted in the study. One of the goals of this reporting is to get a truly accurate picture of how many properties are owned by corporate entities.

The city has been slow to enforce its own rules for rental properties, according to the data collected by Data Driven Detroit. The increase in the number of properties has not helped. Ninety-four percent of rentals in 2021 had been registered. This year, that percentage is 81%. The number of rentals that have a valid certificate of compliance has improved, but it’s still at 9%, a small minority of properties.

David Bell, the director of the city’s Buildings, Safety Engineering, and Environmental Department, previously told Outlier that “the City’s current rental housing ordinance creates a complex, multi-step, time-intensive, and expensive process, ultimately resulting in low compliance and low effectiveness.” Bell said the city is open to reforms.

Outlier expects to release more findings throughout the spring and summer.

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