15 August 2008

Bank Pays $10,000 To Give Away Detroit House

You know Detroit real estate values are in trouble when banks have to pay buyers in order to sell houses at foreclosure sales. While this isn't uncommon in cases of documented toxic waste problems, it is unusual for an ordinary home acquired in a foreclosure sale.

Why the bank chose this route rather than simply allowing it to be foreclosed upon by the city for unpaid taxes is also mysterious. Perhaps they were concerned about in personam liability for unpaid bills in connection with the property and land owner liability.

According to today's Detroit Free Press real estate classified ads section, there are 610 properties currently being listed in the City for $10,000 or less, including many three and four bedroom homes, and at least some five and six bedroom homes.

While sales are picking up, Detroit real estate prices have gotten catastrophically bad (as of June 4, 2008):

Buyer activity within the city of Detroit has increased dramatically and may spread to surrounding areas. For the first four months of this year, home sales in the city increased by 48 percent from last year, according to residential sales statistics released by the Michigan Association of Realtors. The average price dropped 56 percent to just $20,514, as many of the sales “involve decrepit homes in neighborhoods with few jobs,” according to a report on hard-hit areas by The Wall Street Journal last month.

Much of the buyer activity in the city has been based on speculation as investors snap up entire street blocks of underpriced properties and wait “for things to get better,” Chubb said. The overall market has also attracted the interest of first-time buyers, who have typically delayed their plans to purchase homes until recently.


What next?

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