Residential property values in Detroit are expected to increase by an average of 20 percent in 2020 tax assessments, the largest one-year rise in the city since 1997. The city’s numbers are based on two years of market sales and mark the third consecutive year of growth and second consecutive year with the largest increase in value of any city in Wayne County.
Last year’s average increase was 13 percent in residential property values. This year’s announcement was made Tuesday by Detroit Mayor Mike Duggan.
While property values have increased, homeowners are protected against large property tax increases. Under state law, the annual increase in property taxes is capped this year at 2 percent as long as ownership did not change. When a home sells, the cap is lifted for that property and the taxable amount adjusts to the State Equalized Value the year following the transfer.
“This is great news for Detroit homeowners, particularly those who held on to their properties and stayed in the city,” says Duggan. “Homes values in nearly every neighborhood are rising and helping to build new wealth without significant tax increases. This shows as clearly as anything that the city’s revitalization has reached nearly every corner of our city.”
The city plans to mail out more than 400,000 notices of proposed assessment changes this week to residential, industrial, and personal property owners. The notices are not bills and, under state law, property owners have the right to appeal the proposed changes. The city also offers an informal opportunity to appeal property values. The proposed 2020 assessments are tentative until completion of the local review period in March and any possible changes from the Wayne County Equalization in April. Bills will be mailed out at the end of June and November.
When Duggan took office in 2014, the city’s residential values had lost an estimated $3 billion in value since 2010. Duggan announced a 29 percent cut in residential assessments in his first month in office, followed by further cuts in 2015 and a citywide reevaluation. In 2016, some areas of the city began to see modest growth in residential property values, but they were confined to downtown, Midtown, and a few neighborhoods.
In 2019 assessments, the city’s residential properties gained about $400 million in value compared to the year before. In the 2020 proposed assessments, the residential property class grew by more than $600 million, bringing the city’s gain over the two years to more than $1 billion, a 35 percent increase in property value.
Improved city services, parks and recreation, and the demolition or renovation of nearly 30,000 vacant homes created a climate for stronger services, according to Duggan.
“We have had a clear strategy from the beginning to start with improved city services, blight removal, and quality of life issues to help stabilize neighborhoods,” he says. “While we still have a lot of work to do, the strategy is working.”
To determine this year’s assessment, the city examined two years of actual market sales, including 62,355 transfers of all types including market sales, quit claim deeds, and land contracts. The office of the assessor reviews aerial and street level imagery of properties to determine value.
Across the city’s 194 neighborhoods, 186 saw an increase of value compared to 2019.
- 17 had an increase ranging from 1 percent to 10 percent.
- 43 had an increase ranging from 10 percent to 20 percent.
- 94 had an increase ranging from 20 percent to 30 percent.
- 32 had an increase ranging from 30 percent to 40 percent.
- Eight had a decrease in value in the range of 0 percent to 5 percent.
Residents will have three weeks to appeal all assessments, which is longer than the usual two-week timeframe. The assessors review appeal process will take place between Feb. 1 and Feb. 22 in room 804 of the Coleman A. Young Municipal Center at 2 Woodward Ave. During this time, the office will remain open on Saturdays. The March board of review, the second step in the process, begins on March 3 and ends March 26 in room 1208 of the center. Questions can be directed to assessorreview@Detroitmi.gov.
Residential property owners must begin the appeals process at the assessors review. Commercial, industrial, and personal property owners may proceed directly to the Michigan Tax Tribunal. The deadline to apply to the tribunal is May 31.
The city urges those who need financial support to apply for the Homeowners Property Tax Assistance Program, which grants full, 50 percent, and 25 percent exemptions on the current year’s property taxes.
Residents who apply before March 21 and are approved by the city’s board of review can receive their tax exemption before their summer tax bills are prepared and sent out in July. At least half payments are due Aug. 15. Taxes not paid before March 1 of the following year are delinquent and sent to the county treasurer for collections.