Think life in Detroit is awful? Where else can you grab a piece of the American Dream for your monthly paycheck?
Not everything in Detroit is bad. Kids play here. They still make some fine automobiles in these parts. It’s not all a scene out of 8 Mile, after all.
But Detroit real estate prices are abysmal. Many cities have homes you can buy for less than $3,000, but I think we have more than anywhere else.
Why so cheap?
As with any commodity, and that is what homes are, just another commodity, not the special can’t-lose-investment- proposition-that-you-can-also live-in deal that we were all promised for decades, so start with
Supply and Demand.
, more supply, price falls to equal demand.
Detroit has been hard hit by foreclosure.
Let’s look at what makes a home valuable.
There is the structure itself, brick or wood or whatever, how big is it, basement, and so on.
Our country is full of homes which you can purchase for less than the replacement cost of the materials and labor it took to build it.
Most of the cheapies have been vandalized at some point in the foreclosure process. Maintenance? Not quite up to date.
So you start off withbefore you can move in.
After acquisition cost, what about maintenance? Property taxes?
As with any other item, a home is worth what a willing buyer will pay a willing seller, no matter what it cost, or sold for last time.
And which way are home values headed?
The Detroit real estate market is projected to drop another 13.4% through March of next year.
Cost of Ownership
Taxes are still high in Detroit, despite the apparent lack of city services in some areas,
Is it in a safe neighborhood?
If not, homeowner’s insurance will cost more too. And the older the house, the more likely stuff is to break, wear out, and need replacement, like furnaces and roofs.
How much are the utilities, water bill?
Mayor Bing has proposed restricting city services to certain areas.
Whether the house is cheap or not, you need to estimate these costs BEFORE you buy. Lots of us squeeze out everything we have to buy more house, then have no furniture, no fund for the first appliance that breaks or other unplanned costly event.
Are you living in it, or renting it out to someone?
Hey, if you have no kids, have a concealed weapons permit, can fix up the house yourself, or know the rental market, there are deals out there.
But never buy something just because the price looks good.