Tuesday, March 20, 2007

Houses cheaper than Cars?

An article published yesterday discussed the trouble Detroit real estate was in. Detroit's economy is in serious trouble with the loss of jobs in the automotive industry. Over 14% of the population are unemployed and one-third live in poverty. Added to those problems is the rising costs of mortgages because of sub-prime lending these past few years.

Because of this many homes are going for auction. This past weekend over 30 homes were sold for under $30k. That is less than many cars on the market. A 4 bd home near Motown sold for $7k on auction.

I have no idea what will happen. I had never thought that homes would be worth less than cars. But it appears that people are leaving Michigan in droves. And they are just walking away from homes. The opportunities outside the state are so much more appealing that people are deserting their homes. When will this exodus stop? Is this what will happen to other midwestern cities?


Matt said...

The economy in Southeastern Michigan is pretty uniquely horrible...for a lot of those people, the early-90s recession never actually ended. Plus between the lack of diversification in the economy (when people stop buying crappy American cars, there's nothing else to fall back on...even people who don't work in the auto industry tend to work for businesses that depend on auto-industry money in one way or another), the iron stranglehold that the unions keep on the labor market, the state's insanely business-hostile tax policy, and uniform public perceptions of being a bad place to invest...the economic climate isn't likely to recover much.

On top of THOSE factors, you've got all the wonderful things about the city of Detroit itself...the crime, the corruption, the city income tax, the commuter tax, the hulking monstrosities of buildings abandoned since the 1970s (Detroit is the abandoned building capital of the world), and the residents' annual night-before-halloween tradition of putting large parts of the city to the torch...

There's a reason the "Robocop" movies were set there. Detroit is a hole.

My fiancee and I have thought of selling bumper stickers saying "will the last person out of Michigan please turn off the lights". (We're both ex-Michiganders happily living in Indiana, with no worries whatsoever about the resiliance of the economy here in Chicago-land.

Living Almost Large said...

I just can't believe how bad it's gotten. I feel terrible for people there.