This month, thousands of homes will be auctioned off in Wayne County, Mich., starting at $500. But so far, people aren’t buying. The majority of these are in Detroit and not exactly a hot commodity.
While the county has seen a boom in housing this year, it’s happening 20 or 30 minutes out of the city, which famously declared bankruptcy just months ago. Housing is booming in the suburbs, where foreclosures are more easily absorbed by the market and homebuyers are looking to invest.
"Detroit is a split personality, because where there's activity, it's in the suburbs," David Blitzer, chairman of the S&P index committee, told CNN Money "It's not in the center city,"
Since the recession, housing prices in Detroit are down 36 percent, and still 28 percent below pre-recession levels, according to the most recent Case-Schiller index.
The market hasn’t recovered at the same rate as the rest of the country. Detroit currently ranks at 90.8, which is indeed up from 77.65 last year, but is nowhere near the National Home Price index, which sits at 146.32.
This month more than 18,000 properties will be auctioned off by Wayne County, a 672-square-mile area that includes Detroit and surrounding cities. In the first round that ended last week, just 880 of these were sold. For the next rounds, bids are starting at $500. All of these homes had owners who failed to pay their taxes for more than three years.
Roughly 90 percent of these properties are in the city of Detroit, and many are vacant lots with uninhabitable skeletons of properties that once stood on the land, according to the Wall Street Journal.
"A lot of these properties are just simply not habitable," said the story’s reporter, Matthew Dolan, on the WSJ morning podcast Wednesday. "This is sort of the bottom of the barrel."
The situation hasn’t been helped by state-appointed leaders filing for bankruptcy in July of this year -- citing an estimated $18 billion in long-term debt.
The median selling price in the Detroit area rose just 3.8 percent to $11,000 in September, according to data from Realcomp, the multiple listings service for Southeast Michigan (via MI Live). Meanwhile, sales fell 13.4 percent to just 415 units.
Meanwhile, Wayne County as a whole is doing much better. The median selling price for the county jumped 50.8 percent since last September to $75,000, even though the actual number of home sales dropped 3.7 percent. Neighboring counties Oakland and Macomb saw median prices increase just 17.5 percent and 6.9 percent respectively.
The reason for the overall growth is in the suburbs, where buyers are more confident and looking to make a long-term investment.
"You try to get your people in the house the day it lists, because it might sell right away," real estate agent Pat Chasteen, who works in Grosse Pointe Farms, a suburb in Wayne County, told the Wall Street Journal.
In the city of Belleville, which is also part of Wayne County and just a 30-minute drive from Detroit, the median sales price is $144,000 with an average listing price of $158,305. Online real-estate firm Trulia lists 509 homes for sale and 298 foreclosures.
While there have been a fair number of foreclosed homes in the suburban areas, they are easily absorbed by the market. Meanwhile, there have been an overwhemling number of them in Detroit. This, plus concerns about safety, public schools and high taxes are putting people off buying homes for a few hundred dollars.
Kathleen is a money reporter at International Business Times with an eye on the Africa business story....