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Detroit House Auction Is Another Flop

From a secretly joyous Reuters:

Detroit house auction flops for urban wasteland

By Kevin Krolicki Mon Oct 26

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

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…

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 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." …

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."

Of course there are plenty of easy answers. Get the citizenry off of their government handouts. Get rid of the unions. Hold the teachers accountable. And cut taxes.

You would see an amazing turn around.

But, no, Reuters has decided that “market-based” solutions will never work. Only more government can save Detroit.

Meanwhile, the problem with the local mindset is perfectly exemplified by the people whining that they couldn’t get “stately” houses for $15,000.

This article was posted by Steve on Monday, October 26th, 2009. Comments are currently closed.

16 Responses to “Detroit House Auction Is Another Flop”

  1. wirenut says:

    The list of victims just keeps on rising. Liberalism is the cause and the effect. Will they never learn?

  2. Gladius et Scutum says:

    Did SG actually type the words “save Detroit”? Been there? If you fly into City (not Metro) Airport, you’ll swear the planes in front of you were dropping napalm (and have been for decades). The only economy in the city is found adjacent the Windsor Tunnel (the Renaissance Center).

    I strongly suspect that the “unidentified investor” willing to shell out $15,000 for a property there is an ‘insider’ who knows about some government project he can unload the properties on for a profit.

  3. Rsaxon says:

    I don’t understand why the environmental brigade from the white house down to the housewife next door to me does not jump onto this as an opportunity to recover some of the nature we have destroyed over the many years of industrialism. We are heading into a new age and do not need all of these dwellings as there is nothing there to support living in them anymore….knock it down, recycle what we can of it- heck even find charities that will move houses to other areas of the US that lack in housing for low income families to save on building costs. Anything but allowing these areas to become havens for crimes and disease is a good idea.

    • pdsand says:

      Ha! You’re right. I’ve heard people complaining about “sprawl” for so long, this is finally their chance to do something about it.

  4. proreason says:

    “It’s a declining dead city.”

    fixed the quote

    • Liberals Demise says:

      You know the fix is in when the mooselimbs yield cheap territory. Must smell like rotting Capitalism to them!

    • proreason says:

      I say let the mooselimbs have it.

      Detroit can be the ultimate liberal paradise.

      Along with Cuba.

  5. canary says:

    The increase of violence and gangs didn’t help.

  6. Rusty Shackleford says:

    Obviously, the economy is racist. First New Orleans (“Chocolate City”) and now Detroit (“Motown”).

    It’s slow….but it’s working. Yes we can!

  7. U NO HOO says:

    I had fond memories of Detroit, etc., the little park by Cobo along the river.

    Can’t go back again.

  8. GL0120 says:

    I am just completely shocked, shocked, I tell you, that anyone would want to buy properties in Detroit or any other third world, er, I mean, disadvantaged area.
    Soon you won’t be permitted to charge enough rent to make it worthwhile; ACORN and Bawney Fwank will crucify you for further oppressing these poor, downtrodden folks, whose only source of income is welfare and crime.
    Of course, you won’t make a profit on the property, but you can be certain your tenants will when they strip everything that can possibly be sold from it.

  9. studmuffin says:

    “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.”

    Common sense? The government is trying to recover some of the money that was owed them, not create a new subsidy for home ownership in Detroit.

  10. Yarddog1 says:

    The whole damn country will look like Detroit soon.

    Think of it as a mirror of things to come.

    What will they do when there’s nothing left to take or tear up?

    • proreason says:

      “The whole damn country will look like Detroit soon.”

      Who can doubt that Obamy favors that rather than the country we had as of June 2008?

      His hatred of white free-market America is so intense, that he prefers to throw the country into poverty and ruin rather than see it continue.

  11. Right of the People says:

    Does this really surprise anybody? I mean WTF, it’s Detroit for heaven’s sake. Ever since they got the court ordered busing they wanted back in the 70’s and everyone who could afford to flee the city did, the entire town has been a ghetto. I grew up in Cleveland which is no bed of roses but it’s like Camelot compared to the Motor City. We used to go to the Ford Museum and Dearborn Village until about 76 but stopped going because it wasn’t safe anymore and that was over 30 years ago. It hasn’t gotten better.

  12. pdsand says:

    Price discovery is probably one of the most important functions of the free market. In this case the headline “Detroit house auction flops for urban wasteland” shows that the market was working just fine. It’s just that the land isn’t worth anything.

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