Disinvesting in the city: the role of tax foreclosure in Detroit

Tax foreclosure offers an opportunity to investigate processes of disinvestment in the city. Prior research has not considered how tax foreclosure administration protects or further damages neighborhoods where foreclosure occurs. Detroit’s loss of households led to disinvestment in housing and demolition of structures. In addition, at each of the three stages of property foreclosure and disposition, implementers took actions that promised to encourage disinvestment in property by facilitating the spread of blight and encouraging negative externalities. This occurred because (1) foreclosures took many owner-occupied properties; (2) the sale of properties to government entities was small and did not promote reuse; and (3) the foreclosure auctions disadvantaged purchasers who would become owner-occupants, channeled properties in strong neighborhoods to investors at low prices, and sold properties disproportionately to destructive buyers.