Investors head to Detroit for Pinto-priced homes
Filed under: Bargains, Real Estate
Quick: Take a guess on what the average sales price for a home in Detroit was for the first couple months of 2009.If you guessed $60,000 you're off by a factor of ten. The average sales price for a single-family home in Detroit was a mind-blowing $6,035.
The Associated Press reports that the 1,800 homes currently on the market in Detroit for less than $10,000 is attracting the interest of foreign investors, who are buying them in bulk in the hopes of renting them out -- and selling them if the market rebounds.
It seems to make sense -- how much lower could they go? But in the end, it might just be a big headache. Detroit's population has been cut in half since the 1950's and to say the outlook for future population growth is bleak would be an understatement. Detroit currently boasts a rental vacancy rate of 19.9% -- a number that will only get worse as the population continues its decline and vacant foreclosures are bought up by opportunists and added to the rental pool.
Meanwhile, the huge amount of vacant housing will require landlords to invest aggressively in their properties to attract tenants -- when 1 in every 5 homes is vacant, tenants have a lot of leverage, and you still might not be able to charge enough rent to cover the amenities they'll demand -- along with the high property taxes that been plaguing Detroit for years and management fees.
This is probably a great time for long-term investors to take advantage of plummeting home values across the country but I think it's probably better to pick areas with more upside. It's better to get a good home at a great price than an awful one at an amazing price.
Reader Comments (Page 1 of 1)
3-10-2009 @ 2:11PM
Peter O said...
detroit is are future so we should study this dump of a city pretty well. It has public schooling and rampant unions which have driven the business world out of this dumpy city. Its politics are far , far left and who the hell wants that besides those that plan on collecting from the city and state. This is what will happen as we insist on soaking the rich and creating more and more unions which will force what thriving companies are still around will close down or move to a right to work state. The police are overwhelmed by crime. which is a side affect of low expectations which is what the left promises its fans , you will be treated and cared for as a victim . Not sure what your victim of ? ask the left they will firgure out someone else to blame for a low standard of living , crappy schooling and high crime . Its always someone else fault is there rule. Enjoy your dollar home and all that it will come with.
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3-10-2009 @ 2:16PM
peter o said...
some have reported this but this real estate crisis is mainly a 5 state issue. Mi,Ca,Fl,Nv,Az so lets just let these states break from us and all will be good , why on earth should we pay for others houses , overpriced house payments. Rewarding bad behavior never works out well
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