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Tuesday, November 09, 2010

CHEAP HOMES

"These houses just need someone to come in and love them a little."

Abandoned House
Want a house, cheap? I mean really cheap not somewhat lower in cost? Go to Michigan.

First, let me tell you a story. I have an internet friend (you know, the kind that's a buddy which you have met perhaps once in real life but talk a lot online) who lives in Michigan. He has a degree in technical writing and is very good at his job. He works hard and is very smart. He also can't find work in his field, and was unemployed for months. My friend finally got a job - at a casino - which he hates, but he has to work to feed his family.

I asked my friend once why he didn't move to other states like Ohio and Illinois where there are so many corporate headquarters and he said "you know, I'd love to, but I own my house and I can't sell it." See, he cannot afford to both pay for his home and pay rent or buy a new place, and move. He's stuck in the pit of despair called Michigan.

Which brings us back to the cheap houses. Les Christie at CNN Money writes:
The real estate market is so awful that buyers are now scooping up homes for as little as $1,000.

There are 18 listings in Flint, Mich., for under $3,000, according to Realtor.com. There are 22 in Indianapolis, 46 in Cleveland and a whopping 709 in Detroit.
...
In Detroit for instance, Century 21 Villa owner Randy Eissa has a three-bedroom, one-bath bungalow of about 1,000 square feet listed at just $500. It's a nice place with lots of light, but it needs a total rehabilitation inside, which Eissa estimates will cost between $15,000 and $20,000. But that's not bad, considering that the home last sold for $72,000 in late 2007, according to Zillow.com.
See what happened is that these homes foreclosed, and the banks couldn't move them, at any price. So they're gutting the price just to unload these white elephants - homes in Michigan and other depressed areas - and the prices are insanely low. The banks want to dump these houses because they have to pay property taxes and minimal maintainance feeds (you can't just let the place go wild or get fined by the city), and its cheaper to just eat the initial cost in the long run.

The only drawback? There's a damn good reason they are this cheap. These are areas without jobs, so you will be hard pressed to live there even with the low cost of housing. Another problem is that while you'll have paid just a pittance for these homes, the county assessor thinks they're still worth 40,50,70 thousand dollars or more. They want that property tax, so it doesn't matter that it would only sell for 500 bucks on the market. Assessors have their own scheme for determining housing prices, and it doesn't include your cut rate sales price.

And like the article says, when people get so enraged at banks because of the foreclosures, they tend to go berserk and trash the place. That means a lot of money in fixing the homes up. Some will have had squatters living in them, some will have animals, most are just broken up by enraged former owners. So they don't end up being as cheap as you'd think initially.

Welcome to life in depressed America, because that's what states like Michigan and California are experiencing. Technically the nation as a whole is not in a recession any longer, but some spots are and have been a long time.

By total and unrelated coincidence, these are areas which have for decades been run by socialists and hard left idealists from both parties for decades. These are areas of deep corruption and idiotic economic planning, leftist schemes, and business-hostile ideas. But I'm sure that has nothing to do with how awful they are doing economically.

Sure.

Hat tip Tim Blair for this story.

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