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Reply With QuoteGoodness. He was outbid by someone who bought the property for $15,000? Wow.
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Worse than a recession I know the economy has natural cycles. But never in my life time have I seen things this bad with SO many people in the same boat. I feel like we in a situation like the great depression.
This article just makes me furious. There are people out there needing and wanting a home and instead all the vulture investors are swooping up property out from them.
Detroit house auction flops for urban wasteland
By Kevin Krolicki Kevin Krolicki – Sun Oct 25, 3:26 pm ET
DETROIT (Reuters) – In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded.
After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag.
"OK," he said. "We only have 300 more pages to go."
There was tired laughter from investors ready to roll the dice on a city that has become a symbol of the collapse of the U.S. auto industry, pressures on the industrial middle-class and intractable problems for the urban poor.
On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters.
Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York's Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.
The tax foreclosure auction by Wayne County authorities also stood as one of the most ambitious one-stop attempts to sell off urban property since the real-estate market collapse.
Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.
The county had no estimate of how much was raised by the auction, a second attempt to sell property that had failed to find buyers for the full amount of back taxes in September.
The unsold parcels add to an expanding ghost town within the once-vibrant town known worldwide as the Motor City.
Critics say the poor showing at the auction underscores the limits of using a market-based system to clean up property tax problems. They say the system has enriched a few but failed to deliver a way for Detroit to staunch its dwindling population and could worsen the vacancy crisis.
One proposed alternative would have officials take control of the tax foreclosure process through a land bank program of the kind being used to revitalize the nearby city of Flint.
The stakes in the debate are rising.
The number of Detroit properties in tax foreclosure has more than tripled since 2007 and seems certain to rise further. The lots for sale last week represented arrears from only 2006, well before the worst of the downturn for U.S. automakers.
"We have to keep in mind that GM and Chrysler filed for bankruptcy this year," said Terrance Keith, chief deputy treasurer of Wayne County. "Some people are going to be totally tapped out next year."
Detroit, already stuck with a $300 million budget deficit, is responsible in the meantime for cutting the weeds and responding to fire calls for thousands more abandoned lots.
'WHY AM I COMPETING AGAINST A BANK?'
Many potential homeowners that Detroit desperately needs said they felt penalized by the auction process.
They mostly found themselves outbid by deeper-pocketed investors from California and New York who were in a race to claim the auction book's relatively few livable properties.
Dozens of potential bidders, mostly local residents, were turned away on the first day of the auction by deputies after they failed to meet the morning deadline for registration.
Ross Wallace, a lieutenant in the U.S. Army, turned in his check for $500 and waited on the auction floor in full dress uniform for a chance to buy a Detroit house on the cheap.
Wallace, 27, said he did not want to leave his fiancee and two children with a mortgage before shipping out to Iraq later this year.
"I still have student loans and I'm trying to be responsible. I don't want to leave debt," he said.
Wallace waited for the auction to roll around to Detroit's Boston-Edison district, a once stately area that was home to boxing legend Joe Louis and Motown founder Berry Gordy.
But he was quickly outbid. An unidentified investor at the front of the room who had scooped up several dozen properties took the home Wallace wanted for about $15,000.
"Why am I competing against a bank?" he said later. "It would be common sense to have a separate process for people who want to move back to the city or it's going to stay empty."
Nearby, a Dutch-born local woman, Riet Schumack, 54, knitted patiently through the auction for a chance to bid on a lot in Brightmoor, one of the most blighted neighborhoods.
Schumack, who runs a community garden near her home that employs 14 neighborhood children, said she had been battling through a maze of bureaucracy for years to try to buy an abandoned lot nearby to expand and plant fruit trees.
She learned the lot had been taken back from its previous owner -- an absentee investor with more than 100 abandoned lots in Brightmoor -- only because of her constant calls to city and county officials, she said.
When officials told her she would have to wait for a fourth day to bid on the property, Schumack broke down into tears.
"Anybody with a job is not able to sit here for days. So you are left with the sharks," she said.
Opinions were divided on whether the investors buying lots and homes by the dozen were a sign of better times ahead.
"They weren't here two years ago. So why are they here now? Unless, as speculators, they believe this is the bottom," said Keith of the Wayne County treasurer's office.
Bill Frank, a Detroit realtor trying to buy a small house for a just-married friend, found himself repeatedly outbid.
"Speculators are often not good for a city and, from my experience, they are going to lose a fortune," he said. "But there are no easy answers. It's a declining city."
(Editing by Peter Bohan and John O'Callaghan)
Re: Worse than a recession I really don't know what to think about this. On the one hand, it IS the right of the investors to bid just like anyone else. They shouldn't be penalized for taking advantage of a business opportunity.
But it would be nice if these homes were occupied by folks that needed them. I understood from the article that several potential occupents were turned away for not completing the application process. I wonder why they didn't get their paperwork in?
It is the free market system at work. Highest bidder wins. If they couldn't afford more than $15,000 of house, should they be encouraged to buy the home?
Deep pockets doesn't seem to really be applicable here when the houses we're talking about go for $15,000.
Re: Worse than a recession 1. Investors will almost always outbid the average working guy.Originally Posted by mama22qts
2. Investors are a LOT more experienced with the paperwork, and many times, have a professional dealing with that end of it.
3. The 15k house is WHAT they could afford. WTH is wrong with that? These neighborhoods NEED revitalization. People who WANT them is the best way to do it. THe average car can cost over 20k. If you only have 5k to spend on one, should you not buy one? Or do you look for what you can afford. Kudos to the guy who saw an oppurtunity to buy what HE COULD AFFORD (that should be the point, right?)
4. Free markets need restrictions. You want to eventually be bidding against massive companies and donald trump? I doubt it.
5. Deep pockets ARE applicable when people can snatch up 10,20,30 of these houses at a time. And leaving people who would do more good for the area in the dust.
Re: Worse than a recession Kinda like shelf clearers taking everything off the shelves? Even if they never plan to use it themselves? Isn't that basically the same principal? Just bigger merchandise thats all. (and I am in no way trying to start an argument with those that do the clearing, just making a comparison point..)1. Investors will almost always outbid the average working guy.
2. Investors are a LOT more experienced with the paperwork, and many times, have a professional dealing with that end of it.
3. The 15k house is WHAT they could afford. WTH is wrong with that? These neighborhoods NEED revitalization. People who WANT them is the best way to do it. THe average car can cost over 20k. If you only have 5k to spend on one, should you not buy one? Or do you look for what you can afford. Kudos to the guy who saw an oppurtunity to buy what HE COULD AFFORD (that should be the point, right?)
4. Free markets need restrictions. You want to eventually be bidding against massive companies and donald trump? I doubt it.
5. Deep pockets ARE applicable when people can snatch up 10,20,30 of these houses at a time. And leaving people who would do more good for the area in the dust.
I see nothing wrong with investors coming in and getting property that needs to be sold. Its a free country and just like an auction on anything, its going to go to the highest bidder. From what I've read many of these investors are renting the homes back out after renovating them. Nothing wrong with that either. Shoot, if I had the money I'd love to invest in some of the areas that have been hit so hard - but we happen to already own a house in one of the hardest hit areas that we can't sell.
Re: Worse than a recession Our neighborhood is like that (not detroit though). Every few houses is boarded up (they've been condemened)..and just sit there.
Part of the problem out here is the way they do property tax is absurd. Paint your house...up your property tax goes. Put a new roof on...up your property tax goes. So NO ONE freaking paints there house or puts a new roof on...and these houses are 100 years old...so you can imagine what they look like...and since people don't put new roofs on...they end up with so much water damage...they get condemned.
It's like the county shoots themselves in there own foot but can't grasp it KWIM.
We were lucky and found a fabulous well taken care of house...huge 100 year old victorian.....only reason why we can afford is it...is because of the crappy neighborhood were in. And it all comes down to poverty. People cannot afford to have there property tax go up...so they let there house go to pot. There's no gangs here, little crime but we have deplorable looking houses. The house next to us got sold for $7000. Still empty....It's only been empty for about 20 years now *sigh*
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Re: Worse than a recession This reminds me--I heard about an auction in our state recently where they actually stopped the auction after 6 or so properties sold for WAY below what they were expected to bring. Sorry folks--an auction is just about the best indicator of the value of something. Some people still haven't realized that property values are continuing to head down the crapper.
I personally don't see anything wrong with investors buying property. Investors are people--and if they are a group that group is made up of people and they have the same right to buy things as regular people. Like a PP mentioned, they aren't buying the property just to hoard it and keep some deserving poor person from having it--they are buying it to rent out for someone to live in (maybe someone who can't afford to buy ANY house.)
Re: Worse than a recession What stood out most in the article for me was this:
I think this is an illustration of financially unsound thinking. If I don't want my family to have debt, the most financially responsible thing to do in this situation would be paying off my student loans (debt!) before buying a house. I have an outrageous amount of student loans, but $15,000 would make a nice dent. I get the pride and potential investment of home ownership, especially at such amazing prices, but, speaking from wretched experience, it's easy to grab short-term gains without weighing the long-term costs. I definitely wish we had done that at my casa, because even someone who paid good cash money for a house outright would still have property taxes, home repairs, and all the other expenses associated with home ownership (Love ya, $5,000 foundation repair!). Based on what I've seen on the inside of the bargain-basement homes in our area, they come ready-equipped with repair lists, anyways, so you'll definitely need to put in more money.
Re: Worse than a recession I live in a suburb of Detroit and for the past two years I have been looking for a house. Everytime I find one that I can afford, an investor snatches it up before I can even put in an offer, flips it, and then puts it back on the market for double. I think these flipping shows on TV have made everyone and their brother want in on the action around here. I've been in tears at times because I have been kinda picky and then when I find one, bam, it's gone. I now am having a good time watching some of these flipped houses sit on the market because nobody wants them after they try to resell them for more than they were sold for a few month before.
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I am in the same freakin boat as far as buying a $ pit of a house! 
