19 thoughts on “Markets in everything: $1 houses in Detroit”

1. How does this actually work? It seems implausible that any house is worth nothing. Why don’t the sellers just keep it?

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   • “The sellers” most likely means city or county government. Most have been abandoned by the previous owners.

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     • andy-

       i doubt it is quite this simple.

       my suspicion is that they have a pile of nasty back taxes or utility bills owed and or have some other severe issue like being condemned or full of mold or who knows what.

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   • Likely, because the owners have determined that they can’t turn those properties into an asset. If you know that it’s going to cost $50,000 to fix a property that’s not going to be worth more than $25,000 for the foreseeable future, you might as well try and pawn it off on some sucker (or someone who can afford to think longer-term than you). Some houses are worth less than nothing.

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2. My family lived in Detroit for a few years in the 80′s and I visited where we used to live a few years ago and it’s sad to see the abandoned houses and think that is where someone grew up.

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3. Prof. Perry,

   Since you actually live in the area, why not just buy all nine of them for $9? Without actually visiting them, of course (they are probably in extremely dangerous areas).

   Buy all nine of them, and they say ‘I own 10 homes in the Michigan area’.

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   • Dangerous area is right, but maybe not for the usual reasons people consider an area dangerous. Some of these houses may have huge unpaid tax bills that would need to be paid by the new owners.

     If these were such great deals, we would never know about them, as they would never be listed for sale.

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   • Because with the taxes and endless city bureaucracy, they are over priced.

     There is only one reason Detroit is in the toilet: government.

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4. For fifty cents, anyone want to go halfsies with me?

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   • A time share! What a great idea. Vacation in Detroit this year.

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     • Actually, I was just planning on burning the place down for the insurance money

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       • Ahh… Ok, in that case I’m in. Put me down for 50 cents.

         The house – not the rapper.

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       • What do you think the price of insurance would be in Detroit that would cover a fire in a vacant house? I’m guessing just insurance, property tax, and the water/sewer would run you near or over $1000 a month for even a small house. Detroit is not known as a cheap place to live.

         The last time I heard, the yearly price of full coverage car insurance for a basic car parked overnight in an inner-city Detroit zip code was about $5000 a year for a middle-aged driver with an excellent driving record. That’s about 4 to 5 times other places in Michigan.

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         • 1. I don’t know of an insurance companies that will insure a vacant house except during construction, for obvious reasons.

           2. If Jon & I can insure our new joint venture for more than the initial costs we will be money ahead.

           3. If I’m not mistaken, your insurance quote for inner city Detroit is for a car valued at $1500. You can expect to lose 3 of them a year.

         • 4. If Jon & I can slurp up some taxpayer money through a “public-private partnership” we will be even happier.

         • If Ron & I were ever to do this in real life, the cops would smell “fraud” in a second and throw us in prison.

         • SLAP! Oh darn it, just when I was starting to enjoy the idea.

5. Are there any areas where low wage manufacturing could buy up 50 or so houses in liveable condition for cheap and give them to employees? The idea being that having no house payment would significantly lower the wage you would have to work for.

   The only thing in the way would be government back taxes owed & they should be forgiven. I hear Detroit also has plenty of once inhabited land that is now vacant that they could offer manufacturers for free. Add in a no property tax incentive and all the other benefits of manufacturing in America (transportation, energy prices), & and how does this package combined not lower wage costs enough to attract new enterprises?

   Oh yeah, it’s violent Detroit.

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6. OK. There’s a house. Property taxes on the house and lot are, oh, let’s pretend it’s a reasonable place instead of Detroit, 12 mills, i.e. 1.2% of assessed value per year. Whoever was paying the mortgage couldn’t keep up, owed more and more, needed more and more repairs he didn’t know how to do and couldn’t pay to have done, gave up, and skipped the state, looking for a job. It’s been getting worse. The city seizes it, goes through the process and offers it up. No one bids.

   They try to package it with several others. No joy. They try to apply for a federal grant to demolish them. No joy. Pay us $1 and some fraction of what we consider to be past due taxes and it’s yours, they say. There are still no takers.

   OTOH, a while back, I was reading a book on renovation of various kinds of old structures. There is special renovation insurance you sometimes have to get while the work is being done, mainly to cover injuries to workers, possible damage to neighboring structures, etc. But there are deals the local government, historical district board, etc., can sometimes arrange.

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