Detroit sees rock-bottom home prices
DETROIT - Welcome to Landlord Nation, where foreclosure notices are plentiful and for-sale signs offer at least 1,800 homes for under $10,000. In extreme cases, homes are on sale for $1 or less, which has enticed investors from as far away as Australia.
"In the past few months, I've picked up 10 new clients from out of state that are buying in bulk," said Mike Shannon, a real estate agent. "They're coming to us, saying, 'Look, I want to buy 50, 100, 1,000.' " He recently sold 30 homes in one day to one buyer. A trio of United Kingdom investors bought a half-dozen and plan to buy many more.
Outside buyers are the latest in a long line of landlords taking over the deteriorating housing stock of a city that because of its once-mighty auto industry boasted one of the highest owner-occupied housing rates in the United States. Such investors aren't interested in only Detroit, but it's been targeted because values have fallen so much more than elsewhere.
Detroit now has the lowest ownership rate for single-family detached homes of the 20 largest US cities, according to data analyzed by longtime Detroit demographer Kurt Metzger.
Even the sale of US Housing and Urban Development homes has been affected by the poor climate. The average sales prices of such homes plunged from $46,702 in 2003 to $8,692 last year. Through the first month of 2009, the average sale was $6,035.
The winners might be the renters lucky enough to live in a house that's been fixed up by a legitimate landlord. The losers might be those who end up in less reputable hands.
The recent rush offers some experts hope for a housing market with no better options left. Property values drop when homes are rented, but in many cases the alternative is an empty house.
"At times, it's the only way to get the homes occupied," said John Mogk, a Wayne State law school professor.