I was reading that housing prices are very low in Detroit right now in some cases less than the price of cars, would it be wise to buy property there, and sit on it hoping the prices would go up? I am from SoCal, and would like to invest in property, however the money needed just for a down payment in Southern Cal, could buy 2 or even 3 houses up there, and my thought is now that I am 30 in a few years when I am ready to retire I could make alot of money off of it. I know the economy is poor there, and its not a very desirable place to live right now, but it may be worth the gamble right now, as it may change in the future. What are your thoughts?
2007-03-22 11:59:49 · 5 answers · asked by kris76 4 in Business & Finance ➔ Renting & Real Estate
Housing prices are excellent in the Detroit area right now. However, two things must be considered when determining whether you want to own property in Michigan, especially if you currently live in SoCal.
1. Rent or resell.
Although you will probably get a great price on a great home, the economy in this area, at this time, is not such that you would recuperate your costs to resell. The home could sit on the market for quite some time costing you money. If you decide to rent, you will still be saddled with the costs related to rental rehab when renters lose their job, due to the poor economy, and need to move out.
2. Longdistance ownership.
You currently live in SoCal, the home is in Michigan. You would have to factor in costs for a property management company, maintenance, services, etc. These costs could eat into your positive cash flow, resulting in a net loss on what was a great price for a great house.
Given the scenario you described, personally, I wouldn't invest in property in the Detroit area at this time. Maybe when the national economy gets better.
My .02's worth.
Good luck, whatever you decide to do.
2007-03-22 12:16:54 · answer #1 · answered by ken erestu 6 · 0⤊ 0⤋
I am from Illinois, so I have an excellent idea of how the economy of the Midwest is.
Although it is very hard to even make the down payment is SoCal, it is much more desireable there.
All in all, the economy of Detroit will be suffering catastrophic looses in the near future. I wonder why you want to invest in Detroit.
If you wanted to move to Chicago, you would be able to buy a house very affordably and have a stable economy. You even could rent out your house if you wanted to.
Personally, I have been wanting to move to SoCal for many years. I hope to be moving to San Francisco Bay in the summer!
Basically, if you can buy ANYTHING in California, the value will increase tremendously.
So, stay in SoCal.
2007-03-22 19:12:11 · answer #2 · answered by Anonymous · 0⤊ 0⤋
At the end of the day, it's all about supply/demand. The problem is the fundamentals are pretty scary right now. That presents an opportunity. However, I think it is important ask the following along with other questions. How do you envision a turnaround? Is the the auto industry getting better? Are you attracting new businesses? Why is unemployment 10%? re you buying a lemon that has been maintained poorly? Can you afford the mortgage leverage and the potential for further downturns? Bottom line: I would personally avoid speculating on real estate in Detroit. I think there are better opportunities balancing risk and reward.
2007-03-22 19:11:08 · answer #3 · answered by gls_merch 5 · 0⤊ 0⤋
Let me put it this way. In 1968 there were race riots in the city of Newark, NJ following the assassination of Martin Luther King, Jr. This precipitated white flight from the city, leading to an enormous economic slide. For the last 40 years, Newark has been a dumping ground. Now you have to ask yourself if you think Detroit will ever come back from the economic mushroom cloud that currently hangs over the city. Can you wait for 40 years? Or forever? There has to be other places where your money would be better spent. The trick is to find a city that is economically healthy and buy undervalued or foreclosed real estate there or else buy it on the outskirts of the city in the anticipation that urban or suburban sprawl will evenutally make your property more valuable. By the way, the article I saw said that unemployment in Detriot is in excess of 14%.
2007-03-22 19:48:40 · answer #4 · answered by jhartmann21 4 · 0⤊ 0⤋
You should go to good long term markets that are more stable, Detroit isn't stable at all right now. Houston and Phoenix are great markets for investing. My company is handeling many so. cal investors right now.
2007-03-22 20:47:13 · answer #5 · answered by Mark P. 5 · 0⤊ 0⤋