Building the Eviction Economy: Speculation, Precarity, and Eviction in Detroit

By Eric Seymour (Brown University) and Joshua Akers ( University of Michigan-Dearborn)

Evictions have recently gained national attention, in large part through the publication of Matthew Desmond’s Pulitzer Prize-winning book, Evicted. According to subsequent work from Desmond and colleagues at Princeton University’s Eviction Lab, we now know that roughly 1 in 40 renter households were evicted between 2000 and 2016, with nearly one million renter households facing eviction each year. While eviction is certainly more likely for low-income renters, Desmond’s work shows how families experiencing eviction fall even further into poverty as a result. After eviction, it becomes even more costly and difficult for already vulnerable families to find housing, hold jobs, and stay healthy.

In addition to this important line of research on the downstream consequences of eviction, other academics and journalists have addressed their attention to recent patterns of investor acquisition of single-family properties across the U.S. and what that means for the housing security of tenants. Large institutional investors, like the giant private equity firm Blackstone, snapped up single-family homes in places like Phoenix and other Sunbelt housing markets hit hard by the foreclosure crisis. Blackstone’s business model is based on selling securities backed by income from these large rental portfolios. To satisfy investors, institutional landlords have been raising rents, making it difficult for tenants to remain in place.

Our UAR paper explores the relationship between opportunistic investment in single-family homes in Detroit since the mid-2000s and the eviction crisis residents in the city continue to face. In Detroit, as in other old industrial cities in the Midwest, investors purchased large numbers of distressed properties through mortgage and tax foreclosure sales. These investors pursued a range of practices intended to maximize short-term revenue, often at the expense of low-income African-American homebuyers and tenants, from renting properties while withholding maintenance to selling homes through high-cost land contracts and rent-to-own arrangements. When tenants withhold rent due to unsafe housing conditions or buyers fail to meet the onerous terms of installment contracts eviction often follows.

To study the relationship between these types of opportunistic property investment and eviction, we drew on records of home sales at the Wayne County tax foreclosure auction, held annually since 2002. Originally intended as a mechanism to return properties to productive use, the auction has served instead as a vehicle for making them cheaply available to problem buyers. Between 2002 and 2016, roughly 110,000 Detroit homes were repossessed for delinquent taxes. Though many properties fail to sell at auction, investors account for the vast majority of purchases. In total, investors acquired about 40,000 Detroit homes at auction through 2016. With these data we joined records of eviction filings maintained by the district court with jurisdiction over Detroit.

We analyzed these data first by linking tax auction sales and subsequent eviction filings. We found that many of the auction buyers with the largest number of evictions were indeed parties likely to employ problematic home sale and rental strategies. Second, we used statistical techniques to examine the relationship between the number of evictions in a neighborhood each year and the number of properties sold at auction over the past few years. We found that after accounting for all the features of neighborhoods that do not change over time, as well as other important factors like mortgage foreclosure and demolition that influence evictions, sales to auction buyers in past years are predicted to increase evictions in the current year.

Our study and its findings shed light on the transformation of housing markets after the housing crisis, particularly the way investors in cities like Detroit capitalized on a steady stream of distressed and discounted properties to profit from the large number of households lacking adequate income or credit to find alternatives to the products offered by contract sellers and slum landlords. Further, our findings suggest that evictions are an essential component of these investors’ business models. Evictions entail the threat or use of state force to remove tenants no longer willing to pay for substandard housing or unable to meet unsustainable contract terms. Given the prevailing legal context in which the prerogatives of property owners are privileged over tenants, investors have little to fear from engaging the state to enforce contracts though they themselves are often in breach of contract.

Our findings suggest the need for strong policy intervention, including the implementation of tenants’ right to council. However they also suggest the need for municipal governments to enforce rental property registration and inspection requirements, though the cities in which these investor practices flourish may have limited capacity to perform these tasks. Most importantly, our study demonstrates the importance of examining upstream aspects of property relations for understanding the nature and prevalence of eviction in American cities. In Detroit, this work suggests the need to throttle the supply of homes to bad actors and, and the same time, provide adequate numbers of affordable and safe housing units, the absence of which structures the predatory low-end housing market.

Read the UAR article here.

Photo by Sérgio Rola on Unsplash

Author Biographies

Eric Seymour is a postdoctoral research associate at Spatial Structures in the Social Sciences (S4) and the Population Studies and Training Center (PSTC) at Brown University. His research focuses on post-crisis housing insecurity and neighborhood dynamics under conditions of decline.

Joshua Akers is an Assistant Professor of Geography and Urban & Regional Studies at the University of Michigan-Dearborn. His research examines the intersection of markets and policy and their material impacts on urban neighborhoods and everyday life.

1 Comment on Building the Eviction Economy: Speculation, Precarity, and Eviction in Detroit

  1. Thank you for publishing this: re-sharing…

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  1. reblog: Building the Eviction Economy: Speculation, Precarity, and Eviction in Detroit — Urban Affairs Forum | ShiraDest: toward The Four Freedoms for All Human Beings

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