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High Tax Assessments Possible Cause for Growing Foreclosure Rate

shutterstock_50982631According to an article from The Washington Post, high assessments may be to blame for Detroit, Michigan’s foreclosure crisis. Two college professors, Bernadette Atuahene and Tim Hodges, published a study making the case that the property tax on thousands of homes’ were illegally assessed. In 2015, Detroit had one of the highest foreclosure rates at 3,949 foreclosures per 100,000 people.

In an article from Detroit Free Press, Atuahene cited data from her previous study titled “Stagegraft” last year showing a consistent rate of tax assessments higher than what the Michigan State Constitution allows from 2009-2015. “In our study, we find that Detroit’s assessor is flagrantly violating this vital state constitutional provision” Atuahene told the Press.

The Michigan constitution states homes cannot be assessed at more than 50 percent of its market value. However, data from Atuahene’s most recent report suggests that between 55 and 85 percent of homes were assessed well above the legal amount from 2008 to 2015, according to the Post. More than 160,000 homes have been foreclosed on in Detroit since 2002.

Another important detail is how certain properties were targeted based on property values. Data showed cheaper properties were more likely to be assessed higher than the more expensive ones. In an interview, Atuahene states “We found in [the lowest priced homes] 95 percent or more were being assessed in violation of the Michigan constitution. But when you get to the highest valued homes, only 13 percent were assessed in violation.”

In the article from the Post, Detroit Chief Assessor Alvin Horhn disputed the findings of the more recent study which is planned to be published next year. “Much of the data does not meet the standards of the State Tax Commission. Therefore its findings would not be applicable under Michigan law” Horhn told the Post.

About Author: Dean Terrell


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