In Detroit, (some) houses cost less than cars

[Urederra]

http://www.foxnews.com/story/0,2933,259907,00.html

As Foreclosures Rise, Houses in Detroit Cheaper Than Cars
DETROIT — 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!"

Click here to visit FOXBusiness.com's Real Estate Center.

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.

There is more of the story in the link.

Anyone from Detroit, (Civrules) who can comment the news?
Or any economist (Whomp, Jerichojill)?
Is it happenning somewhere else in the US? I hope it is not happening in my area since I bought my house just 2 years ago.

 

[Masquerouge]

I really wish it was happening in the bay area.

 

[Bozo Erectus]

Yep, the debt based American economy is starting to look down and notice its in mid air.

 

[Phlegmak]

Is it happenning somewhere else in the US? I hope it is not happening in my area since I bought my house just 2 years ago.

It's also happening in postdiluvian New Orleans and its affected suburbs. My mom sold one of her ruined houses for less than $30k.

 

[RedWolf]

I work in the automotive industry and we have a location in the Michigan area. We've all taken some serious cutbacks over the last year or so but they've been hit harder then the rest of us. The mood down there is solemn and morale is at an all time low. Every employee in our Michigan office knows that if they get cut - they're looking at drastic lifestyle changes because there just aren't any jobs available in the area - especially in their field (engineering/manufacturing etc.). To make matters worse they look around their streets and see all the for sale signs - so then they know they're stuck in a catch 22 situation - if laid off they can't afford to STAY because there are no jobs but they also can't afford to LEAVE because their house has decreased so drastically in value.

 

[joycem10]

Hell the copper tubing and wiring in those houses is probably worth more than the sale price.

No offense to anyone involved, but you couldnyt pay me to live in these parts of Detriot.

My wife used to work for Ford Motor Credit, she was let go as a result of the vaguely Maoist sounding "Bold Move Forward" program, no surprise here that the motor city is nearly empty.

 

[CartesianFart]

Probably in crack-ridden neighborhoods.

 

[RedWolf]

No offense to anyone involved, but you couldnyt pay me to live in these parts of Detriot.

I know people in Novi, Michigan which is a pretty middle class suburb. They tell me there are houses for sale left, right and centre.

Across the border in Windsor, Ontario things are also getting bad - they thrive on the big three and when they're hurting the city bleeds along with them.

 

[Stolen Rutters]

In the Detroit Area, there are alot of houses for sale, and the market is going down. There are more than 10,000 homes for sale in Wayne County alone (the county where Detroit is located). They aren't selling very fast. Plan on waiting two years...

I live in Washtenaw County, where things aren't quite as bad (maybe more like the aforementioned Windsor, Ontario) but our houses aren't selling either. I bought my house for $120K and I can probably sell it for close to that, since I got in before the last run-up. The transfer costs would eat up most of the equity I have built up, though (yes, I have equity... I am one of the few Americans who is actually trying to pay my debts off faster than the bank wants me to).

 

[JerichoHill]

http://www.foxnews.com/story/0,2933,259907,00.html



There is more of the story in the link.

Anyone from Detroit, (Civrules) who can comment the news?
Or any economist (Whomp, Jerichojill)?
Is it happenning somewhere else in the US? I hope it is not happening in my area since I bought my house just 2 years ago.

It's JerichoHill, and yes, the housing bubble is bursting, and yes, its going to hurt.

Woe onto all of those who bought homes with non-fixed mortgages and alternative finances.

The government will investigate, but its beyond the scope of them to even begin to alleviate.

Basically, real estate got to the point of being a ponzi scheme, where its growth could only be sustained by adding in more homebuyers and more speculators and more junk mortgages. The house of cards had to fall.

Read the Housing Bubble Blog

 

[.Shane.]

I really wish it was happening in the bay area.

Be careful what you wish for. I doubt you wish the BA economy mirrored Detroits?

 

[JerichoHill]

Be careful what you wish for. I doubt you wish the BA economy mirrored Detroits?

Shane,

He'll get his wish though. The Bay Area in Cali is Ground Zero for Subprime Foreclosures for the next few years.

KA-BOOM!

I suppose I should mention that I shorted the hell out of the subprimes. Contrarian investing rocks

 

[.Shane.]

He'll get his wish though. The Bay Area in Cali is Ground Zero for Subprime Foreclosures for the next few years.

I figured as much (I live near Sacramento), but I thought this would be somewhat mitigated by the fact that the BA is not plagued by 1000s of laid off workers.

 

[JerichoHill]

I figured as much (I live near Sacramento), but I thought this would be somewhat mitigated by the fact that the BA is not plagued by 1000s of laid off workers.

Check out the Housing Bubble Blog. It's fun reading.

FWIW, you'd be my favorite CFCer if you trailed the guy who writes at IamFacingForeclosure.com and harassed him for being a dumb*ss. He's in Sacramento too. Once you read his story, you'll see that Sacramento is well, going to have alot of fun.

Enjoy your brand new REO previously foreclosed mansion that you'll get for about 40% off of current prices in 2 years!

 

[Xanikk999]

Damn those houses must be crappy shacks if they cost less then cars.

 

[Urederra]

It's JerichoHill

Sorry...

And thanks for the reply.

 

[.Shane.]

Check out the Housing Bubble Blog. It's fun reading.

FWIW, you'd be my favorite CFCer if you trailed the guy who writes at IamFacingForeclosure.com and harassed him for being a dumb*ss. He's in Sacramento too. Once you read his story, you'll see that Sacramento is well, going to have alot of fun.

Enjoy your brand new REO previously foreclosed mansion that you'll get for about 40% off of current prices in 2 years!

lol, I live in Davis. Higher prices than Sac, in general, but a much tighter market (heavily controlled and restricted growth + student population that keeps increasing).

We bought in 2002. Should I expect my value to drop below what I paid?

 

[Dell19]

As a contrast the house prices here are ridiculously high. For that price you would be lucky to get a cardboard box.

 

[innonimatu]

Now that the last possible bubble (housing) is finally bursting my guess is that the US will follow on the footsteps of Japan of the late 1980s… the days of debt-based “growth” are over. At least as a side effect hopefully the free market bullfeathers (the Washington consensus) will be thoroughly discredited for some 20 years (but no more, because both people and economists refuse to learn from history).

With debts going unpaid and house prices collapsing, how will US banks avoid big trouble ahead? The dollar can only go down, and it will go down faster if interest rates are cut. They can’t be cut without causing the collapse of the carry trade and even bigger trouble on the short term for banks. And it interest rates are not cut the debt service alone will force consumers to spend much less than they did… deep recession. No one will want to invest in the american economy, so who will finance the deficits and how will the banks retain liquidity?

 

[CaptainF]

Yeah, but the catch is that you have to live in Detroit.