This is the second in a three-part series on the Detroit housing market. Read part one, on the city's residents who rent from faraway buyers, and part three, on the riskier alternative for people who want to buy without a mortgage.

Hardly anyone in Detroit gets a mortgage, and that’s common knowledge. Just ask Cymone Thomas,

“There’s some beautiful homes in Highland Park ... big family homes,” she said, describing the area’s blocks upon blocks of solid brick two-stories, three or four bedrooms with yards. A lot of them need work, but they can be really affordable, well below $50,000.

“I definitely want a home cause I have a son, I want him to have his own backyard,” she said. But when a home sells in her neighborhood, it’s almost always in cash.

And that’s common: in Detroit, where the median home value is still below $40,000, there were fewer than 500 home loans out of 7,700 home sales in 2014. Cash is king, and a lot of sellers push for cash-only transactions.

The U.S. housing market is in a recovery, and home prices are once again on the rise. But while some real estate markets are exploding, pockets of Detroit and other cities remain devastated post-Recession, with homes selling for way below what they were once worth.

And just getting a mortgage in those markets has gotten more difficult. The result is that in markets where single-family houses are the cheapest, there’s hardly any lending going on. The Urban Institute in 2015 studied ten other, smaller markets where, as the number of inexpensive homes has gone up, the number of mortgages under $50,000 has nonetheless declined. In the lower-end markets — potentially a source of opportunity for first-time or low-income homebuyers — there appears to be virtually no lending going on.

The reasons for the disappearing mortgages are complicated. The most obvious is that many people’s credit and wages were battered by the Great Recession. Cymone Thomas is a case in point: “I’m definitely looking into it, but my fina...