Detroit Housing Prices

The Detroit Free Press took a thorough look today at Detroit home prices. Yes, they are going up. Yes, some of them were so low it did not take much to get them to go up. Yes, certain neighborhoods held up well during the drop in 2008-09 and are still holding up well. Yes, out of state investors need to be careful. In short, nothing that we did not already know, but they have lots of pictures.

Readers of this blog have been keeping track of prices in Detroit all along. That's particularly because of our philosophy that Detroit is a great place to buy a house if you can buy the right one in the right neighborhood. That's why you need to know the neighborhood. Sometimes crossing the street can make a difference in prices.

Investors from out of state are vulnerable to being taken advantage of. The news story includes one such person, who bought a house and used a property management company, but did not make any money. As she observed, it is hard to make money on Detroit from afar.


Link: http://www.freep.com/story/money/real-estate/2015/07/11/detroit-home-values-rising/29169949/

House Auction Perspective: Repeating One of Our Favorite Posts

Tax Auctions are a thing in Metro Detroit. Before you jump in and get your $500 fixer-upper in Detroit, read our previous post on the topic, which is still just as relevant.

Link: http://downriverhomes.blogspot.com/2014/01/a-500-auction-buyers-story.html

Strathmoor Leads Group Who Bundled

Developer Herb Strathmoor has taken credit as being the focal point of the consortium who bid on the huge bundle of Detroit properties and has now won them.  Keep in mind that these properties were bundled together with the idea that they would not sell and then the Detroit Land Bank could try to make something of them.

I will have my own take on their plans later this week, but for now it is important to know that mr. Strathmoor already has tax leins on properties in Detroit.  Oopsie.

Link:
http://www.detroitnews.com/story/news/local/wayne-county/2014/10/29/developer-won-detroit-property-auction-outstanding-liens/18117195/

My Thoughts on the Detroit Bankruptcy

I posted these thoughts on Bigger Pockets in response to this thread, but thought it might be interesting to see what blog readers think.  The discussion basically centered on why Detroit went bankrupt and what the future held.  Feel free to comment below.

1) A portion of Detroit's deficit can be attributed to changes in the state's municipal funding system, changes which victimized urban and fully developed areas and rewarded small towns and open areas.  When the state ran into their own financial issues, they chose to cut local revenue sharing (meant to replace other money lost in another tax change).  That change alone meant $200 million less for Detroit.

2) The real estate collapse hit Detroit worse than just about anywhere else.  Tax revenues plummeted.  Then, thanks to certain unique aspects of Michigan law, residential taxes did not bounce back when prices bounced back up.  It will be 2028 before taxable valuations are at 2008 levels.

UPDATED: 6000+ Homes Bundle in Tax Auction Has a Bidder

Wayne County bundled 6,350 properties together in their most recent round of tax auctions.  Instead of the usual starting price of $500, these were grouped together.  Probably about 2,000 of those are vacant lots, and another 3,000 or so are beyond help and will need to be demolished.

The $3,183,500 bid relieves the Detroit Land Bank of the estimated $24 million cost to demolish those homes, so Detroit officials have got to be happy about that.  Rumors are that others may yet bid and drive the price up. 

So the buyers get 1300 decent houses, 3000 that need torn down, and 2000 vacant lots. $24 million to demolish the bad ones should be figured into the bid. The vacant lots are not worth anything, really. $27 mil to 1300 decent houses works out to about 21000/house, unless they figure they can do the demolitions cheaper. Sounds like a win-win to me.

The auction ends in seven days.

Link:
http://www.detroitnews.com/story/news/local/wayne-county/2014/10/21/m-bid-placed-bundle-foreclosed-properties-detroit/17659389/

A Dramatically Transformed Detroit is Coming

John Gallagher suggests in the Freep that Detroit in ten years could look very different, and for the better.  Yes, we've heard it before, like for the last 50 years or so.  But now we can point to specific changes that have already happened.  So I agree with him.

Remember this look, because it will be changing soon.

How about the new Red Wings arena/entertainment district?  The growth of neighborhoods surrounding downtown?  M-1 Rail?  The re-birth of Capitol Park from ashes?

Detroit in ten years will have an active, walkable downtown core.  Maybe Dan Gilbert will have sold some of his 60 buildings by then.  Or maybe he will own 100.  More about that later this week.

Neighborhoods will benefit from improved services, although this will not happen overnight.

By the way, what do you think about the idea of filling in I-375 and turning it into a surface street?  Feel free to post comments below.

Link: http://www.freep.com/story/news/local/michigan/detroit/2014/09/28/downtown-m-rail-arena-bridge/16343825/

Shipping Container Condos Coming to Corktown

Wow, that is a lot of words starting with C in that headline.

Now that we have got that out of the way, let's get to the meat of the story, which is that condos made from shipping containers are going to go up in the Corktown area (near the old Tiger Stadium) of Detroit.  I think you will be able to see them from I-75 after they are completed.  Models should be in place to spur sales in the spring.

Not sure what we are talking about?  Check out our previous posts on the subject.

Link: http://www.detroitnews.com/story/business/2014/09/23/shipping-containers-condominiums-corktown-detroit/16096663/

Have We Found Batman and Superman in Detroit?

A parcel downtown with construction sprouting of an apparent temporary nature?  Shipping crates nearby? Could it be a movie set in the making?  Considering this was the same piece of property that was used filming the latest "Transformers" movie, it should not be shocking that Sixth and Howard (near the old State of Michigan building) in Detroit will be used for the upcoming "Batman vs. Superman" blockbuster.

We know star Ben Affleck is in town, so work must have already begun.

Tax Auction Properties Revoked for Taxes

Wayne County Treasurer Ray Wojtowicz has filed suit to get back about 80% of the properties sold in the 2011 Tax Auction...because their new owners haven't paid their taxes.  It would be funny ironic if it wasn't sad.  Let me explain.

As the Detroit News talks about, part of the issue is buyers who buy up large amounts of properties and don't pay any taxes on them (or probably put any other money into the properties) before they flip them to some other buyer.  Some of these sales are on a land contract, so the deed (and taxes) would still be in the name of the auction buyer even if they sold their $500 purchase for $3,000.

This gaming of the system has been known for some time.  We discussed it on this blog last fall, in the middle of the last tax auction, here and here.  Bulk buyers are not in it for the long term.  These buyers might not even know where these properties are and might not have ever seen them in person.

But that is not always the case.  We shared with you the story of an intrepid guy who bought one of these $500 auction houses because it was what he could afford to buy.  He struggled with his finances, his lack of rehab skills, and issues in the neighborhood, but he emerged with a livable house he could call his own.

If bulk buyers are letting properties go again, then it means that the properties were not worth keeping.  Since these are 2012 taxes we are talking about, this means that decision was made almost immediately upon purchase and did not change.

More than anything, these reversions are evidence that our tax auctions need revision.  If 80% are failures, then the system is not working for our community.

Wayne County has had a staggering number of tax foreclosures in the wake of the 2008 downturn, and Detroit has been hit particularly hard.  The tax auction may be the best response to an unworkable situation, but some tweaking (as has been done since 2011) is needed.

Links:

Treasurer sues auction buyers for unpaid taxes:  http://www.detroitnews.com/article/20140619/METRO01/306190041/Wayne-County-wants-reclaim-78-sites-sold-tax-auction-since-11

Tax houses owe taxes: http://downriverhomes.blogspot.com/2013/09/tax-auction-houses-owe-taxes-again.html

Tax houses owe taxes (part two): http://downriverhomes.blogspot.com/2013/09/tax-auction-houses-owe-taxes-again-part.html

A $500 buyers story: http://downriverhomes.blogspot.com/2014/01/a-500-auction-buyers-story.html

The Steeple Stands Tall

St. Josaphat, the Damaged Era

When last we spoke of the steeple at St. Josaphat in Detroit, the one that had been damaged by winds last November and was in danger of collapsing, it was...in danger of collapsing.  There was no real money to fix it and the outlook was bleak.  Best case plans seemed to be cutting off the steeple to save the church underneath it.

Almost three months later, things are looking up.  About $90,00 has been raised to fix the steeple, iconic along I-75 at Canfield (you can't drive the stretch of freeway without once again noticing it.).  That has funded structural work that has left it stronger than when it was first built.  At least the steeple won't fall off onto the street now.

Looks like they straightened up the place.

Alas, the money raised so far is not the $500,000 or so needed to completely repair the damage and get the church off the the City of Detroit condemned building list.  So it's still not at all clear what will eventually happen.  For now, though, let us savor this partial victory.

For more information on the Save Our Steeple campaign, or to contribute, you can follow this link.

Links:

Deroit Free Press article (http://www.freep.com/article/20140609/NEWS01/306090019/St-Josaphat-church-spire-Detroit)

Save Our Steeple

Indian Village Stunner

Yes, I know Indian Village in Detroit has nothing much to do with Downriver, but you have got to see this house.

I am a sucker for craftsmanship and rich materials, and this place has it in abundance.  Original owner Charles Butler did this Iroquois street home right.  Having Albert Kahn design it didn't hurt, either.

Here's some more pictures, courtesy of the Detroit News.

Link:
http://www.detroitnews.com/article/20140606/LIFESTYLE01/306060021/There-s-no-place-like-Indian-Village

Shipping Container House for Midtown

Yes, we probably talk about shipping container homes more than most blogs.  That doesn't mean they aren't worth covering.

Midtown Detroit will see a pilot project of sorts using this very container.  An intern for Michigan Urban Farming Initiative will live in it, blog from it, and oversee their (urban) farmland from it, starting in the fall.  Sounds like a great gig for a young adult in search of a unique experience.

What do you think?  Would you be up for this experience?




Link:
http://www.detroitnews.com/article/20140430/AUTO0103/304300091/Home-built-from-shipping-container-unveiled-Detroit

Detroit Rocks for Landlords

Want to know one of the best places in the world to be a landlord?  Right here in the D.  Of course, we've been preaching this for awhile now, so we're glad CNN caught up.

We'll have more later today.

Link:
http://money.cnn.com/2014/04/16/real_estate/detroit-landlord/

A Barn in Detroit?

No, this isn't the Detroit location.

The married owners of a Detroit landmark restaurant want to move a barn from her parents rural farm to Midtown Detroit.  Actually, it has already been disassembled and trucked down here awaiting a plot of land to put it on.  Best guess is that a  barn has not been built in that area for over 100 years.

It sort of makes some sense after you read about it in the Freep.  It may not be the best idea, but it has some possible value.

Link:
http://www.freep.com/article/20140330/COL44/303300051/detroit-barn-traffic-jam

Unpaid Taxes for Section 8 Landlords

Some landlords are taking advantage of the system, buying cheap properties, renting them to poor tenants who get federal section 8 subsidy, then not paying the taxes.  They milk the property for as long as they can, then abandon it.

The Detroit News exposes this scam, which is particularly prevelant in Detroit because many houses can be bought for a couple thousand dollars.  As far as I am concerned, this type of behavior is unethical.



http://www.detroitnews.com/article/20140328/METRO01/303280040/Detroit-landlords-cash-rent-aid-ignore-tax-bills

Barron's: Detroit Will Rise Again

I can't link to the article because it is subscription content, but the cover image is good news.  Stories like this will be replacing ruin porn as the Detroit storyline in the national media.

I agree with the overall sentiment of the cover, although turning around Detroit is like turning the proverbial battleship. Downtown and Midtown are definitely improved, but there are neighborhoods that need police, fire, and lights. Get those up to par, and improve the bus service, and you have the potential for a lot of growth in the city. People vote with their feet, and Detroit has been losing population for a long time. Get some people moving back in and then a turnaround could be real and lasting. I'm not only rooting for the city, but have put some money where my mouth is.

Will St. Josaphat Steeple Be Saved?

Curbed Detroit, which is an excellent blog about, uh, Detroit, has some great news for us.

Last November, a storm severely damaged St. Josaphat Church in Detroit, right near Mack and clearly visible to anybody driving down I-75 by there.  After the damage was done, the steeple roof was leaning to one side and resembled an elf hat more than anything else.  It was also unsafe and adjacent Canfield street had to be closed.  Early reports on the historic, but sparsely attended church said it was impractical to repair and that the steeple would have to be cut off, which was too bad because it is a beautiful landmark that I always enjoyed seeing.

Well, recent breaking news is good.  It looks like there is a way to save it and the funding to do so.  At least that is what some are saying.  According to the Detroit Historic District Commission (and you would think they know), the 113-year steeple is heading for rehab.  Plans are for structural repairs and a new slate roof.

We will keep you posted of further developments.  Or you could just drive around downtown and see for yourself.

If you would like to contribute to the Save Our Steeples fund for this project, you can do so here.

Links:
http://detroit.curbed.com/archives/2014/03/it-sounds-like-st-josaphats-crooked-steeple-will-be-saved.php

http://motherofdivinemercy.com/2013/12/03/save-our-steeples/

Detroit Projects That Never Were Completely Realized

Original plan for Civic Center.  Cobo Arena is to the left. Grassy area with trees bottom center turned into Hart Plaza.

Grand plans never fully realized.  What might have been.

In some cases, these scaled-down or never-built Detroit projects would have been awesome.  In other cases, they probably never happened because they were a bad idea whose time will never come.  Still, we can gaze upon the unrealized dreams.

Never built.

Update: Artists Lofts Evictee Gives POV

Remember this?

Awhile back, we posted about the Capitol Park Artists Lofts at 1217 Griswold in downtown Detroit. New owner Dan Gilbert (who has bought just about everything downtown) was evicting the residents and planning to renovate the building. The building is in serious need of repairs and is currently violating housing codes. However, the residents being evicted are artistic types who used a lot of imagination decorating their seedy lofts.

Evictees? Just visiting?  This might be Gustav and Andrew.

Capitol Park Artist Lofts Can't Survive

Curbed Detroit examines the lofts in a downtown Detroit building at 1217 Griswold, in the Capitol Park neighborhood.  The falling-apart structure was recently purchased by Dan Gilbert (who buys EVERYTHING downtown) and current residents are being told to vacate the death trap so that it can be renovated.  Reports indicate it would never pass a code inspection currently.