When I said yesterday that the median house price in Detroit was less than $10,000, Matt, in the comments, quite reasonably doubted the stat:
That just does not pass any kind of smell test. $8,500 for a house or a condo? I know Detroit’s not the loveliest town in the world but even there that’s got to be, if not a misprint, then seriously misleading.
I asked the ever-resourceful David Sunstrum to look into this, and it seems that the stat is really true. Here’s a nice-looking 3BR, 1,557 sqft house for $10,000: that’s about $6.42 per square foot. If you don’t have that kind of money, here’s a $1,000 house, and here’s a $500 house. Says David:
There are about 180 homes on realtor.com alone that are for sale for at or below $1,000 (that’s not a misprint), with some for a few hundred. The common theme is that these homes either need serious work… The huge wave of foreclosures in Detroit has left banks owning loads of properties that they want to get off their balance sheets, at any price.
Remember that in many ways a house is a liability rather than an asset: the owner needs to pay taxes on it, put effort into trying to sell or rent it, etc etc. Houses can and do go to zero, if they’re in neighborhoods with more supply of housing than there is demand for it.