Houses cheaper than cars in depressed Detroit

D

Dogfish

Houses cheaper than cars in depressed Detroit
Mon Mar 19, 2007 3:42PM GMT

By Kevin Krolicki

DETROIT, March 19 (Reuters) - With bidding stalled on some of the least desirable residences in Detroit's collapsing housing market, even the fast-talking auctioneer was feeling the stress.

"Folks, the ground underneath the house goes with it. You do know that, right?" he offered.

After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: "The lumber in the house is worth more than that!"

As Detroit reels from job losses in the U.S. auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property.

It also stands as a case study in the economic pain from a housing bust as analysts consider whether a developing crisis in mortgages to high-risk borrowers will trigger a slowdown in the broader U.S. economy.

The rising cost of mortgage financing for Detroit borrowers with weak credit has added to the downdraft from a slumping local economy to send home values plunging faster than many investors anticipated a few months ago.

At a weekend sale of about 300 Detroit-area houses by Texas-based auction firm Hudson & Marshall, the mood was marked more by fear than greed. Continued...

http://uk.reuters.com/article/marketsNewsUS/idUKN1927997820070319
 
"A boarded-up bungalow on the city's west side brought $1,300. A four-bedroom house near the original Motown recording studio sold for $7,000.

"You can't buy a used car for that," said Izairi. "It's a gamble, and you have to wonder how low it's going to get." "


Well at least your risk is pretty much zero, two houses for under ten grand, what's the worst that can happen, just hold the plots for 40 years
 
Quote from Dogfish:

Well at least your risk is pretty much zero, two houses for under ten grand, what's the worst that can happen, just hold the plots for 40 years
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You could walk out your new front door and the boy next door might shoot you. :eek:
 
Quote from Dogfish:

Well at least your risk is pretty much zero, two houses for under ten grand, what's the worst that can happen, just hold the plots for 40 years
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There is likely a carrying cost in the form of property taxes asscociated with the lots however. Do away with the tax and it might be feasible to hold for a decade or more until values rise again.
 
Well, as long as the property taxes are based on property value, then they shouldn't be too bad!

This doesn't surprise me. My wife's grandfather has a house that he bought in the 50's for $12,000 in NE Ohio (steel country) with a nice yard. The house has been kept up nicely (he still lives there) but the area around him is horrible now. He'll be lucky to get back his $12,000.
 
Michigan is terrible, so yes, the dual armpits of Michigan, Detroit and Flint, are even worse.

There are some really nice suburbs in Detroit (Birmingham, Grosse Pointe, Bloomfield, Troy, Rochester, Franklin), and some amazing areas further north (Charlevoix, Petoskey, Portage, Traverse Bay area), and a lot of you who have only heard negative things would be surprised at some of the wealth in these areas.

But yes, Michigan is being dragged down quickly as hundreds of thousands of UAW workers, who for decades fed greedily at the trough prepared for them not just by their UAW 'leaders,' but by the 'negotiators' for the American automakers, lose their jobs, pensions, etc.

For every one auto worker, 9 more job loss casualties in the general economy result.

The next time you have a chance to see a major factory or plant close, look at the 2-5 mile perimeter around it. It's like a cancer when the plant closes, infecting and killing all the shops, stores and restaurants around it.

I will also say this to balance things out: Although the unions and incompetent management at the companies themselves helped kill the U.S. auto industry, we as Americans need to realize there is a trade off for losing our high wage manufacturing base in this country - it's not without devastating costs, and I believe it makes us weaker long term.

Right now, Caterpillar, Deere and Boeing are success stories in American manufacturing. What happens when they face stiffer competition from foreign rivals?

Do you think it's pure skill that's kept them out of trouble?

Boeing is the 'go to' company for countries that are getting pressure from the U.S. because their trade surplus with us is too high. What could possibly shave a few percentage points off a trade surplus faster than placing an order for 50 Boeing 777s?
 
Quote from Dogfish:

"... A four-bedroom house near the original Motown recording studio sold for $7,000...."
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Just think... Ocean-front houses in Carmel, CA can go for $7,000 per SQUARE FOOT!
 
When you want a smokestack with less pollutants than 2nd hand tobacco smoke, boo hoo to manufacturing jobs.

We are a market economy, if you can produce with a pencil and a paper you have a viable business. Enviromentalists ran manufacturing out of Dodge.
 
Quote from blast19:

I heard an NPR podcast last year about Detroit's economy and it was a sad sad picture they painted.
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No reason for that...they could create the tax incentives to spur investment.
 
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