What city, state, and federal policies are needed to solve Detroit's housing affordability crisis?

This story is part of a series that highlights the challenges and solutions around housing in Detroit and is made possible through underwriting support from the Detroit (Region O) Regional Housing Partnership and the McGregor Fund. 

Madhavi Reddy, executive director of Community Development Advocates of Detroit (CDAD), says Detroit is at a "critical juncture" when it comes to affordable housing – and the stakes affect all Detroiters.

As billions of dollars of investment have flowed into Detroit in recent years, housing costs have also soared. According to U.S. Census and American Community Survey data compiled by the State of Michigan Housing Data Portal, from 2013 to 2023 (the most recent year for which data are available), home values in the city rose by 52% while the homeownership rate declined from 51.9% to 49.7%. 25.2% of Detroit renters are cost-burdened, meaning they spend 30-49% of their income on rent, while 34.3% are severely cost-burdened, meaning they spend 50% or more of their income on rent. 
Madhavi ReddyMadhavi Reddy.
"The idea of having affordable housing means that there's room and space for everyone in Detroit," Reddy says. "And I think that is particularly important in a city where many have a lot of concerns about people who've been here for generations, who weathered all the storms of the past 50 years, not being able to stay [in the city]. ... It's really important, in the context of this hot development market, to have affordable housing."

Keegan Mahoney, program director in the city's Housing and Revitalization Department, says the city's future affordability is closely linked to its future stability for all residents – not just those who live in affordable housing. Mahoney says affordable housing developments often serve as "community revitalization anchors" and strengthen the city's ability to attract and retain residents, including many of its most essential workers.

"When we think of teachers, starting police officers, starting firefighters, these are really critical parts of our workforce [who] earn below the incomes necessary to qualify for affordable housing," he says. "So our ability to have our key members of our workforce be able to live in the communities they work in requires affordable housing in order to do that."

So what will it take to foster the affordable housing Detroit needs to ensure a stable future? We talked to several local housing advocates and experts about new affordability strategies at the local, state, and federal levels, and how they could help build a more affordable Detroit.

City policy

Emily Reyst, director of communications and housing initiatives at the Community Economic Development Association of Michigan, says one of the biggest challenges in housing development right now is that "there's a very large gap between what it costs to build and what families can afford." Accordingly, she says one of the most important pro-affordability strategies cities or states can employ is offering developers grants, loans, or incentives that close that gap. While this "gap financing" usually doesn't make up the lion's share of a project's funding, it can make the difference in an affordable development coming together or falling apart.

Detroit has recently taken steps to establish new gap financing options for affordable developments. In October the city amended its Payment in Lieu of Taxes (PILOT) ordinance to allow the city to cancel property taxes for more developments that commit to maintaining affordable rents for at least 15 years. The Detroit Housing for the Future Fund, created by the Local Initiatives Support Corporation and the city, is another relatively new solution, offering grants and low-interest loans for affordable developments.

"The city of Detroit is doing a really good job being accessible to folks and thinking about the ways that they can make their processes easier and honestly be an entity that walks side by side with developers," Reyst says.
Emily ReystEmily Reyst.
The city has also taken steps to ask more of developers and provide more assistance to homebuyers. Its inclusionary housing ordinance stipulates that developments receiving $500,000 or more in local or federal incentives must make 20% of their units affordable to people making up to 80% of the area median income. And its down payment assistance program offered grants of up to $25,000 for homebuyers who make less than 300% of the federal poverty level and haven't held an interest in a property for three years.

"We've just seen tremendous response from Detroit residents to use that program and become homeowners," Mahoney says of the down payment assistance initiative.

Looking to the future, Reddy hopes to see improved structures to help Detroit's nonprofit community benefit organizations (CBOs) spearhead their own affordable developments. She says many existing properties in Detroit would benefit from rehabilitation and redevelopment by these organizations, which have deep roots in their communities and aren't motivated by profit. But they often lack the resources to undertake some ambitious projects, as well as the necessary partnerships with entities like the Detroit Land Bank Authority. 
Phyllis EdwardsPhyllis Edwards.
Phyllis Edwards is the executive director of one of those CBOs, Bridging Communities. She says organizations like hers deserve the same subsidies that for-profit developers receive.

"Give us some tax credit breaks, give us some incentives, because we're here in the community," she says. "We're going to be here. We're not like other developers who come in, develop, and leave. We're going to be here when things go right and when things go wrong."

State policy

Detroit housing advocates also see opportunities to advance affordable housing through state policy. Reyst credits Michigan's Housing and Community Development Fund as a "really flexible source of money," reserved for developments that meet the needs of low income, very low income, and extremely low income Michiganders. However, she says the fund's current funding level, $50 million a year, is "not enough." For context, in her recent State of the State address, Michigan Gov. Gretchen Whitmer called for the state to invest $2 billion to "build, buy, or fix" nearly 11,000 homes. Reyst suggests that the state allocate more to the Housing and Community Development Fund to help meet affordability needs.
Angela CarlbergAngela Carlberg.
Angela Carlberg, senior director of community development ecosystem building at CDAD, advocates for the passage of a brand-new state tool that would establish a 50% state tax credit for donations to locally based community development nonprofits. Similar programs are already established in 13 states, and a Michigan iteration has been proposed in state House Bills 6020 and 6021. The proposal, dubbed the Community Investment Program, would address Edwards' desire for more funding for CBOs to develop affordable housing.

"It's meant to really encourage relationships with individuals and the community development organizations in their immediate neighborhood, having a deep connection to community and focus on place," Carlberg says. "But then it's also an opportunity for the qualifying organizations to tap into those dollars and have them be flexible."

Federal policy

Reddy says many Detroit housing advocates feel "shaky and a little uncertain" right now about the future of federal funding for affordable developments. The Trump administration has already halted a $1 billion program that helps preserve older affordable developments, frozen at least $60 million in grants for new affordable projects, and floated cutting U.S. Department of Housing and Urban Development staff by half.

Housing advocates are waiting anxiously to see if the new administration will take aim at federal funding sources like the HOME Investments Partnership Program, Community Development Block Grants, and the Low Income Housing Tax Credit (LIHTC) program. LIHTC, which Mahoney describes as "the most substantial and important subsidy for affordable housing development in the country right now," is being watched particularly closely. Reyst says these programs already need more investment to meet the need for affordable housing, so any cuts to them "would have a negative impact on folks who are already facing a lot of bureaucratic barriers to getting housing built."
Steve KossThe Ribbon, a new mixed-use development in East English Village, includes 18 rental units reserved for tenants making 80% or less of the area median income.
Despite this uncertainty, Mahoney has hope for a new federal program that would be especially impactful in Detroit. The bipartisan Neighborhood Homes Investment Act, introduced in the U.S. Senate in 2023, would establish a tax credit covering up to 35% of the cost of building or rehabilitating one- to four-family homes in neighborhoods with high poverty rates, low home values, and low median incomes. Families earning up to 140% of the area median income would be eligible to purchase the homes. If passed, Mahoney says the act would be extremely beneficial to Detroit, whose housing stock has one of the highest percentages of single-family homes among major U.S. cities (around 65-70%).

"Right now, there is no good subsidy tool to create affordable housing out of our existing single-family housing stock," Mahoney says. "... A tool to help unlock some of that particularly vacant and distressed housing stock for affordable homeownership, I think, would be a tremendous opportunity in the city."

Reddy says local advocates are already doing a lot of "scenario planning" to be prepared for any outcome at the federal level. In the worst-case scenario, she says, "Detroit knows how to take care of Detroiters."

"There's a lot of mutual aid and a long history of all those things," she says. "But I certainly don't think that's a substitute for systems and a government that ... supports efforts like affordable housing and programming and schools and all those good things. You need investment in those things for places to be strong and for people to thrive."

Engagement in a "critical" moment

Although the existential threat of federal funding cuts looms large over affordable housing development in Detroit at the moment, housing champions say there are still many ways for city residents to get involved in advocating for more affordable development. 

"You can turn on your TV and watch the city council, because everything really starts with the city, with your local voting," Edwards says.
Steve KossThe Ruth Ellis Clairmount Center offers permanent supportive housing for LGBTQ+ youth who are experiencing or at risk of homelessness.
Reddy agrees, noting that the city's mayoral and city council elections this year are "an opportunity for everyday people to shape what the future of the city looks like." She also recommends joining activist groups like the Detroit People's Platform or Coalition for Property Tax Justice. 

Reyst recommends that people educate themselves about affordable housing development in general, as well as the specific details behind new affordable development proposals in their communities. She says showing up to community engagement meetings for new affordable developments as a well-informed community advocate is "powerful."

"There's a great opportunity to get development and housing right, because it's critical," she says. "... It's also just a great opportunity for longtime residents to be able to benefit from this moment and build equity and wealth themselves by perhaps being involved in the development that happens, because these are folks that know their own community's needs."

Patrick Dunn is the managing editor of Concentrate and a freelance writer and editor. He lives in Ypsilanti.

Housing photos by Steve Koss. All portraits courtesy of the subjects.