detroit, are these prices for real?

29 Replies

Yes and yes. 

But I wouldn't want that house even if someone were paying me that much to take it.

Are there any "decent" areas.

The house itself, doesn't look bad, is there any decent patches, that have a chance of turning around, or are most investors just throwing the whole city out?

...and the views from the telescope filter into the blog one more time.

Joe,

indicating since I am in Indiana, and dont have feet on the ground, I really don't know how bad the city has become?

Gabe it's cheap for a reason.

Having said that if you are looking at Detroit take a flight or drive there and see things for yourself. You can't really do that on a forum........... : )

I certainly wouldn't buy something like that in an area site unseen no matter how cheap it is Detroit or elsewhere.

The ad doesn't make any mention of receiving a warranty deed at closing. It says:

  • The Deed will be sent to the Buyer upon Recording by the Wayne County Register of Deeds. Upon Receipt of Full Payment, Deed will be Recorded and sent to Buyer within 10 Business Days.
  • The Property is offered in 'as-is' condition at time of closing with no warranties or guarantees expressed or implied.
  • Clear and marketable title is not a standard in the contracts in detroit?

    Also, the property was last sold on 03/28/13 for $10,000. There is no listing on the MLS, at least not one that is visible on Zillow:

    http://www.zillow.com/homedetails/5801-Chatsworth-St-Detroit-MI-48224/88334913_zpid/

    Originally posted by @Gabe G. :

    Joe,

    indicating since I am in Indiana, and dont have feet on the ground, I really don't know how bad the city has become?

     Indicating that because most of the info people get on Detroit is from those that have never been there, and is based on information from years (even decades) ago.  I had someone on this site use data from 2003 to support his comments.  2003 could have been the worst time in the history of the city, and yet that was a definitive source for his remarks.

    What's happening now?  Since the city finally got it's bankruptcy ruling approved, and the feds have dumped mega bucks into the city, and the city finally has a Mayor (and other leadership) that is actually business minded instead of politically motivated, (all of which is happening simultaneously for a reason), you are seeing a lot of progress on a daily basis...but, the only ones who see it are those with actual "boots on the ground".

    What everyone else hears is a rehash of the comments from decades of "deserved" criticism.   

    Originally posted by @Gabe G. :

    Are there any "decent" areas.

    The house itself, doesn't look bad, is there any decent patches, that have a chance of turning around, or are most investors just throwing the whole city out?

    Yes all us Michigan Detroit people live in a hopeless wasteland.  Michigan is doing much much better.

    Detroit is doing much much better.  Why would you even be interested in that type of property?.

    Come on up for a visit and I will give you a grand tour.  The good, the bad, the ugly. 

    Hello @Gabe G.  

            To answer your question primarily,  YES Those prices are REAL. 

    I was just like you and wondering about all these prices. So this weekend after Christmas, I visited Detroit and roamed around town for 3 days, looking at the Good, Bad and the Ugly. 

    There is a lot I can tell from what I learnt, but for a quick answer, I am not investing in downtown Detroit right now.  I do see certain specific areas are coming up, but it will be a slow growth and really long term game!  Not for me, when I am trying for a gameplan to retire sooner :).

    Pvt message me, if you like detailed insight from my experience.

    Good luck.

    Thanks, 

    Naveen.

    (510) 991-6393
    Originally posted by @Naveen Desai :

    Hello @Gabe G.  

            To answer your question primarily,  YES Those prices are REAL. 

    I was just like you and wondering about all these prices. So this weekend after Christmas, I visited Detroit and roamed around town for 3 days, looking at the Good, Bad and the Ugly. 

    There is a lot I can tell from what I learnt, but for a quick answer, I am not investing in downtown Detroit right now.  I do see certain specific areas are coming up, but it will be a slow growth and really long term game!  Not for me, when I am trying for a gameplan to retire sooner :).

    Pvt message me, if you like detailed insight from my experience.

    Good luck.

    Thanks, 

    Naveen.

    Naveen it was great meeting you.  I hope you saw everything you needed to see.  I just didn't feel like you wanted to see the $1000properties.  Were you able to see what was good and what was bad?

    Naveen I also an going to put in an offer on that property we went into north of the city.

    @Scott K.  

      Hello,  Thanks for your note. I really really appreciate you showing me town and getting me comfortable around. After that, the following 2 days I did go far and wide. I will actually do a write up soon to share that with BP including ( the pics we took :) ).

    Well, since you are local, I think you can make deal on that property and if you can manage yourself, it will work great for you.  Your Roseville property has come out really good and I like your quality of reHab.  Like I said, if you can also help me by managing the properties for me, I am open to talk to you and in fact I do have some properties that I have my eyes on.  However as you know they are nowhere in the price range of the link that @Gabe G.  has shared.  They are in ranges of early 20K's  to mid 30K's. 

    Thanks, 

    Naveen. 

    (510) 991-6393

    yes 20-30 is a good starting point for Properties.  With that starting range many times you can have a solid house that just needs some rehab.  And it won't be in a warzone.

    To me the key is if the property is in a low income area that is not dangerous or a complete bombed out area that is crime infested

    @Wilson Churchill  

      my experience in lending in Wayne county 10 years ago was that the county recorder was one of the slowest recording entities I had encountered in my entire career.. It would take 60 to 90 days to get your document back from the recorders office.

    You can sign the deed but getting it recorded was another thing.

    In Oregon we record same day and get recording numbers within 48 hours. there its 48 days or longer.. this lead to title companies having to give gap insurance. for instance what if some nefarious individual recorded something between the time you purchased and the totally inept wayne county recorder actually recorded your instrument.. you need title to fix it.  We have long meetings with our title company before we started loaning there.

    Originally posted by @Jay Hinrichs :

    @Wilson Churchill  

      my experience in lending in Wayne county 10 years ago was that the county recorder was one of the slowest recording entities I had encountered in my entire career.. It would take 60 to 90 days to get your document back from the recorders office.

    You can sign the deed but getting it recorded was another thing.

    In Oregon we record same day and get recording numbers within 48 hours. there its 48 days or longer.. this lead to title companies having to give gap insurance. for instance what if some nefarious individual recorded something between the time you purchased and the totally inept wayne county recorder actually recorded your instrument.. you need title to fix it.  We have long meetings with our title company before we started loaning there.

    Atlanta was 6+ months behind in 2006. I was like "how is anybody even lending here with that kinda risk?" They'd take the signed deed and HUD-1 as ownership papers to pull permits, though.

    Back to the OP, hard to imagine something you could live in going for that kinda money, seems no matter how bad things were there'd be a play to buy it and O/F it for significantly more. I'm no expert on that market, but I'd think the big problem there is the reduction in population, thats gonna create a pretty huge over supply of housing. Be interesting to see if/when/how it turns around.

    Decline of Detroit

    From Wikipedia, the free encyclopedia

    An abandoned house in Delray, Detroit.

    The city of Detroit has gone through a major economic and demographic decline in recent decades. The population of the city has fallen from a high of 1,850,000 in 1950 to 701,000 in 2013. The automobile industry in Detroit has suffered from global competition and has moved much of the remaining production out of Detroit. Some of the highest crime rates in the United States are now those of Detroit, and huge areas of the city are in a state of severe urban decay. In 2013, Detroit filed the largest municipal bankruptcy case in U.S. history.[1][2] On December 11, 2014, it successfully exited bankruptcy.[3]

    Contents

    [hide]

    Contributors to decline[edit]

    See also: Rust Belt

    The deindustrialization of Detroit has been a major factor in the population decline of the city.[4]

    Role of the automobile industry[edit]

    "Detroit rose and fell with the automobile industry."[5] Before the advent of the automobile, Detroit was a small, compact, regional manufacturing center. In 1900 Detroit had a population of 285,000, the thirteenth largest city in the U.S.[5] Over the following decades, the growth of the automobile industry, including affiliated activities such as parts manufacturing, came to dwarf all other manufacturing in the city. The industry drew in a million new residents to the city. At Ford Motor's iconic and enormous River Rouge plant alone, opened in 1927 in Dearborn, there were over 90,000 workers.[5]

    The shifting nature of the work force stimulated by the rapid growth of the auto industry had an important impact on the city's future development. The new workers came from diverse and soon far-flung sources. Near-by Canada was important early on, many of the workers came from Eastern and southern Europe, a large portion of them being ethnic Italians, Hungarians and Poles. An important attraction for these workers was that the new assembly line techniques required little prior training or education to get a job in the industry.[6]

    The breadth of sources for the growing demand for auto assembly workers, however, was sharply limited by the turmoil of World War I, and shortly thereafter by the very restrictive U.S. Immigration Act of 1924 with its very limited annual quotas for new immigrants. In response, the industry - with Ford in the forefront - turned in a significant way to hiring African-Americans, who were leaving the South in huge numbers in response to the combination of a post-war agricultural slump and continuing Jim Crow practices.[7] At the same time large numbers of southern whites were hired, as well as large numbers of Mexicans, since immigration from most of the western hemisphere was not restricted at all by new immigration quotas.

    By 1930 Detroit's population had grown to nearly 1.6 million, and then to nearly 2.0 million by its peak shortly before 1950. A World War II boom in the manufacture ofwar materiel contributed to this growth surge.[8] This population was, however, very spread out in comparison with other U.S. industrial cities. A variety of factors associated with the auto industry fed this trend. There was the large influx of workers. They earned comparatively high wages in the auto industry. The plants they worked at, belonging to different major and minor manufacturers, were spread around the city. The workers tended to live along extended bus and street car lines leading to their work places. The result of these influences, beginning already by the 1920s, was that many workers bought or built their own single family or duplex homes. They did not tend to live in large apartment houses, as in New York, or in closely spaced row houses as in Philadelphia.[8] After New Deal labor legislation, auto-union secured wages and benefits facilitated this willingness to take on the cost and risk of home ownership.[8]

    These decentralizing trends, however, did not have equal effects on African-American residents of the city. They tended to have far less access to New Deal mortgage support programs such as Federal Housing Authority and Veterans Administration insured mortgages. African-American neighborhoods were viewed by lenders and the federal programs as riskier, resulting - in this period - in much lower rates of home ownership for African-Americans than other residents of the city.[8]

    In contrast, the auto industry also gave rise to a very large and well-compensated layer of managers and executives. There were also large numbers of attorneys, advertising executives, and other white collar workers who supported the industry's managerial force. These white collar workers, already by the 1920s, had begun to move to neighborhoods well removed from the industry's factories and the neighborhoods of their workers. This upper stratum moved to outlying neighborhoods, and further, to well-to-do suburbs such as Bloomfield Hills and Grosse Pointe. Oakland County, north of the city, became a popular place to live for executives in the industry. "By the second half of the twentieth century it was one of the wealthiest counties in the United States, a place profoundly shaped by the concentration of auto industry derived wealth."[9]

    These decentralizing trends, combined with the auto industry itself, which fed reductions in public transit funding and service, made Detroit look much more like Los Angeles than the metropolises of the East. Public policy was automobile oriented. Funds were directed to the building of expressways for automobile traffic, to the detriment of public transit and the inner city neighborhoods through which they were cut to get to the auto factories and the downtown office buildings.[10]

    These processes, in which the growth of the auto industry had played such a large part, combined with racial segregation to give Detroit, by 1960, its particularly noteworthy character of a substantially African-American inner city surrounded by mainly white outer sections of the city and suburbs. By 1960 there were more whites living in the city's suburbs than the city itself. On the other hand, there were very few African-Americans in the suburbs. Real estate agents would not sell to them, and if African-Americans did try to move into suburbs there was "intense hostility and often violence" in reaction.[10]

    The auto industry too was decentralizing away from Detroit proper. This change was facilitated by the great concentration of automobile production into the hands of the "Big Three" of General Motors, Ford, and Chrysler. The Big Three were able to put nearly every smaller competitor auto-maker out of business. While this corporate concentration was taking place, the Big Three were shifting their production out of central Detroit. Between 1945 and 1957 the Big Three built 25 new manufacturing plants in the metropolitan area, not one of them in the city itself.[11]

    The number and character of these new, suburban auto factories was a harbinger of future trends detrimental to the economic health of Detroit. There was an interaction between factory decentralization and the nature of the industry's post-New Deal unionized labor force. Ford Motor was one of the first to undertake major decentralization, in reaction to labor developments. Ford's workers voted to join the UAW in 1941. This led Ford to be concerned about the vulnerability of its huge, flagship Rouge River plant to labor unrest. The workers at this plant were "among the industry's most well-organized, racially and ethnically diverse, and militant." A strike at this key plant could bring the company's manufacturing operations as a whole to a halt. Ford therefore decentralized operations from this plant, to soften union power (and to introduce new technologies in new plants, and expand to new markets). Ford often built up parallel production facilities, making the same products, so that the effect of a strike at any one facility would be lessened. The results for the River Rouge plant are striking. From its peak labor force of 90,000 around 1930, the number of workers there declined to 30,000 by 1960 and only about 6,000 by 1990. This decline was mainly due to automation.[11]

    The spread of the auto industry outward from Detroit proper in the 1950s was the beginning of a process that extended much further afield. Auto plants, and the parts suppliers associated with the industry, were relocated to the southern U.S., and to Canada and Mexico. The major auto plants left in Detroit were closed down, and their workers increasingly left behind. When the auto industry's facilities moved out, there were dramatically adverse ripple economic effects on the city. The neighborhood businesses that had catered to auto workers shut down. This direct and indirect economic contraction caused the city to lose property taxes, wage taxes, and population (and thus consumer demand). The closed auto plants were also often abandoned in a period before strong environmental regulation, causing the sites to become so-called "brownfields," unattractive to potential replacement businesses because of the pollution hang-over from decades of industrial production.[12] The pattern of the deteriorating city by the mid-1960s was visibly associated with the largely departed auto industry. The neighborhoods with the most closed stores, vacant houses, and abandoned lots were in what had formerly been the most heavily populated parts of the city, adjacent to the now-closed older major auto plants.[12]

    By the 1970s and 1980s the auto industry suffered setbacks that further impacted Detroit. The industry encountered the rise of OPEC and the resulting sharp increase in gasoline prices. It faced new and intense international competition, particularly from Japanese and German makers. Chrysler avoided bankruptcy in the late 1970s, but only with the aid of a federal bailout. GM and Ford also struggled financially. The industry fought to regain its competitive footing, but did so in very substantial part by introducing cost-cutting techniques focused around automation and thus reduction of labor cost and number of workers. It also relocated ever more of its manufacturing to lower cost states in the U.S. and to low-wage countries. Detroit's residents thus had access to fewer and fewer well-paying, secure auto manufacturing jobs.[12]

    The leadership of Detroit was not passive in the face of the adverse trends that developments in the auto industry posed. Because the city had flourished in the heyday of the auto industry, the city made periodic attempts to stimulate a revival of the industry within the city. For example, in the 1980s the cities of Detroit and Hamtramck used the power of eminent domain to level part of what had been Poletown to make a parking lot for a new automobile factory. On that site, a new, low-rise suburban type Cadillac plant was built, with substantial government subsidies. The new Detroit/Hamtramck Assembly employs 1,600 workers.[13] In the 1990s, the city subsidized the building of a new Chrysler plant on the city's east side, Jefferson North Assembly which currently employs 4,600 people. These efforts, however, were an uphill struggle against overall trends in the industry.[12] In 2009 Chrysler filed a Chapter 11 bankruptcy case, and survives in a partnership with Fiat SpA of Italy.[14] while GM filed for Chapter 11 bankruptcy on June 1, 2009, and survives as a much smaller company - smaller now than Japan's Toyota Motor Company.[15] A little over two years after these major blows to the U.S. auto industry, the city itself went into Chapter 9 bankruptcy.

    Rise of the suburbs[edit]

    By the 1930s, Detroit had essentially reached its geographic limits, with its expansion stopped by either going against incorporated cities or facing Michigan laws making it impossible to cross a county line. Redford had incorporated as a charter township in 1926 after parts had been annexed to Detroit. The remnant of Springwells Township which had not yet been annexed incorporated in 1923, later joining Dearborn along with a section of Dearborn Township between the two cities. The only townships bordering Detroit in 1950 that did not cross a county line were Redford Township and the remnant of Dearborn Township which became the city of Dearborn Heights in 1963. By Michigan law, the majority of residents in a township need to approve annexations, which prevented Detroit from annexing either of these neighboring areas.[16] Michigan law further makes it impossible for one city to annex another without the city being dissolved.

    1950s job losses[edit]

    Packard Automotive Plant, closed since 1958.

    In the postwar period, the city had lost nearly 150,000 jobs to the suburbs. Factors were a combination of changes in technology, increased automation, consolidation of the auto industry, taxation policies, the need for different kinds of manufacturing space, and the construction of the highway system that eased transportation for commuters. Major companies like Packard, Hudson, and Studebaker, as well as hundreds of smaller companies, declined significantly or went out of business entirely. In the 1950s, the unemployment rate hovered near 10 percent.

    1950s to 1960s freeway construction[edit]

    In the 1950s and 1960s, freeway construction as part of urban renewal cut through the most densely populated black neighborhoods of Detroit. The demolition of buildings in Lower East Side, Lower West Side, Paradise Valley, and theHastings Street business district - and the subsequent physical barriers caused by the freeways - split and reduced the thriving neighborhoods. In the 1950s, 2800 buildings were removed just for the Edsel Ford Expressway (I-94), including jazz nightclubs, churches, community buildings, businesses and homes.[17] The freeways also made commuting from suburban communities a more viable alternative to living in the city limits.

    The destruction of these neighborhoods with little warning or effort on the part of the city to provide housing assistance was catastrophic for the African American community in Detroit. Families on highway sites received only a thirty-day notice to vacate and the commission made no efforts to assist families in relocation.[18]

    I-75, Ford Field, and Comerica Park now occupy most of the area where Paradise Valley once stood. Historian Thomas Sugrue notes that of the families displaced by the razing of the Paradise Valley neighborhood,

    about one-third of the Gratiot area’s families eventually moved to public housing, but 35 percent of the families in the area could not be traced. The best-informed city officials believed that a majority of families moved to neighborhoods within a mile of the Gratiot site, crowding into an already decaying part of the city, and finding houses scarcely better and often more overcrowded than that which they had left.[19]

    Detroit riots[edit]

    Further information: 1967 Detroit riot and Detroit Race Riot (1943)

    The Detroit Race Riot of 1943 broke out in Detroit in June of that year and lasted for three days before Federal troops regained control. The rioting between blacks and whites began on Belle Isle on June 20, 1943, and continued until June 22, killing 34, wounding 433, and destroying property valued at $2 million.[20]

    The summer of 1967 saw five days of riots in Detroit.[21][22] Over the period of five days, forty-three people died, of whom 33 were black and 10 white. There were 467 injured: 182 civilians, 167 Detroit police officers, 83 Detroit firefighters, 17 National Guard troops, 16 State Police officers, and three U.S. Army soldiers.

    2,509 stores were looted or burned, 388 families were rendered homeless or displaced, and 412 buildings were burned or damaged enough to be demolished. Dollar losses from arson and looting ranged from $40 million to $80 million.[23]

    Economic and social fallout of the 1967 riots[edit]

    Per capita income in Detroit and surrounding region from the 2000 census. The dotted line represents the city boundary.

    After the riots, thousands of small businesses closed permanently or relocated to safer neighborhoods, and the affected district lay in ruins for decades.[24]

    Of the 1967 riots, politician Coleman Young, Detroit's first black mayor, wrote in 1994:

    The heaviest casualty, however, was the city. Detroit's losses went a hell of a lot deeper than the immediate toll of lives and buildings. The riot put Detroit on the fast track to economic desolation, mugging the city and making off with incalculable value in jobs, earnings taxes, corporate taxes, retail dollars, sales taxes, mortgages, interest, property taxes, development dollars, investment dollars, tourism dollars, and plain damn money. The money was carried out in the pockets of the businesses and the white people who fled as fast as they could. The white exodus from Detroit had been prodigiously steady prior to the riot, totally twenty-two thousand in 1966, but afterwards it was frantic. In 1967, with less than half the year remaining after the summer explosion—the outward population migration reached sixty-seven thousand. In 1968 the figure hit eighty-thousand, followed by forty-six thousand in 1969.[22]

    According to the economistThomas Sowell:

    Before the ghetto riot of 1967, Detroit's black population had the highest rate of home-ownership of any black urban population in the country, and their unemployment rate was just 3.4 percent. It was not despair that fueled the riot. It was the riot which marked the beginning of the decline of Detroit to its current state of despair. Detroit's population today is only half of what it once was, and its most productive people have been the ones who fled.[21] [Note: In Origins of the Urban Crisis, Thomas Sugrue states that over 20% of Detroit's adult black population in the 1950s and 1960s was out of work, along with 30% of black youth between eighteen and twenty-four] [25]

    Economist Edward L. Glaeser believes the riots were a symptom of the city's already downward trajectory:

    While the 1967 riots are seen as a turning point in the city’s fortunes, Detroit’s decline began in the 1950s, during which the city lost almost a tenth of its population. Powerful historical forces buffeted Detroit’s single-industry economy, and Detroit’s federally supported comeback strategies did little to help.[26]

    State and local governments responded to the riot with a dramatic increase in minority hiring, including the State Police hiring blacks for the first time, and Detroit more than doubling the number of black police. The Michigan government used its reviews of contracts issued by the state to secure an increase in nonwhite employment. Between August 1967 and the end of fiscal year 1969-1970, minority group employment by the contracted companies increased by 21.1 percent.[27]

    In the aftermath of riot, the Greater Detroit Board of Commerce launched a campaign to find jobs for ten thousand “previously unemployable” persons, a preponderant number of whom were black. By Oct 12, 1967, Detroit firms had reportedly hired about five thousand African-Americans since the beginning of the jobs campaign. According to Sidney Fine, "that figure may be an underestimate."[28]

    The Michigan Historical Review writes that "Just as the riots following the assassination of Martin Luther King Jr. facilitated the passage of the federal Civil Rights Act of 1968, which included fair housing, so the Detroit riot of July 1967, 'the worst racial disturbance' of the century to that time, provided the impetus for the passage of Michigan’s fair housing law as well as similar measures in many Michigan communities." Other laws passed in response to the disorder included “important relocation, tenants’ rights and code enforcement legislation.” Such proposals had been made by Governor Romney throughout the 1960s, but opposition did not collapse until after the riot.[29]

    1970s and 1980s[edit]

    The 1970 census showed that whites still made up a majority of Detroit's population. However, by the 1980 census, whites had fled at such a large rate that the city had gone from 55 percent white to only 34 percent white in a decade. The decline was even more stark considering that when Detroit's population reached its all-time high in 1950, the city was 83 percent white.

    Economist Walter E. Williams writes that the decline was sparked by the policies of Mayor Young, who Williams claims discriminated against whites.[30] In contrast, urban affairs experts largely blame federal court decisions which decided against NAACP lawsuits and refused to challenge the legacy of housing and school segregation - particularly the case of Milliken v. Bradley, which was appealed up to the Supreme Court.[31]

    The District Court in Milliken had originally ruled that it was necessary to actively desegregate both Detroit and its suburban communities in one comprehensive program. The city was ordered to submit a “metropolitan” plan that would eventually encompass a total of fifty-four separate school districts, busing Detroit children to suburban schools and suburban children into Detroit. The Supreme Court reversed this in 1974, maintaining the suburbs as a lily-white refuge from the city desegregation plan. In his dissent, Justice William O. Douglas' argued that the majority's decision perpetuated " restrictive covenants" that “maintained...black ghettos.”[32]

    Gary Orfield and Susan E. Eaton, wrote that the "Suburbs were protected from desegregation by the courts, ignoring the origin of their racially segregated housing patterns." John Mogk, an expert in urban planning at Wayne State University in Detroit, says, "Everybody thinks that it was the riots [in 1967] that caused the white families to leave. Some people were leaving at that time but, really, it was after Milliken that you saw mass flight to the suburbs. If the case had gone the other way, it is likely that Detroit would not have experienced the steep decline in its tax base that has occurred since then."[44] Myron Orfield, director of the Institute on Metropolitan Opportunity at the University of Minnesota, has said that

    Milliken was perhaps the greatest missed opportunity of that period..Had that gone the other way, it would have opened the door to fixing nearly all of Detroit's current problems...A deeply segregated city is kind of a hopeless problem. It becomes more and more troubled and there are fewer and fewer solutions.[33]

    The departure of middle class whites left blacks in control of a city suffering from an inadequate tax base, too few jobs, and swollen welfare rolls.[34] According to Chafets, "Among the nation’s major cities, Detroit was at or near the top of unemployment, poverty per capita, and infant mortality throughout the 1980s."[35]

    Detroit became notorious for violent crime in the 1970s and 1980s. Dozens of violent black street gangs gained control of the city's large drug trade, which began with the heroin epidemic of the 1970s and grew into the larger crack cocaine epidemic of the 1980s and early 1990s. There were numerous major criminal gangs that were founded in Detroit and dominated the drug trade at various times; most were short-lived. They included The Errol Flynns (east side), Nasty Flynns (later the NF Bangers) and Black Killers and the drug consortiums of the 1980s such as Young Boys Inc., Pony Down, Best Friends, Black Mafia Family and the Chambers Brothers.[36] The Young Boys were innovative, opening franchises in other cities, using youth too young to be prosecuted, promoting brand names, and unleashing extreme brutality to frighten away rivals.[37]

    Several times during the 1970s and 1980s Detroit was named the arson capital of America, and repeatedly the murder capital of America. Often Detroit was listed by FBI crime statistics as the "most dangerous city in America" during this time. Crime rates in Detroit peaked in 1991 at more than 2,700 violent crimes per 100,000 people.[38] Population decline left abandoned buildings that have become magnets for drugs, arson, and other crime. Such violent crimes has also pushed tourism away from the city, and several foreign countries even issued travel warnings for the city.[38]

    Around Halloween, a traditional day for pranks in late October, Detroit citizens went on a rampage called "Devil's Night" in the 1980s. A tradition of light-hearted minor vandalism, such as soaping windows, had emerged in the 1930s, but by the 1980s it had become, said Mayor Young, "a vision from hell." During the height of the drug era, the fires were becoming more culturally destructive in that it was used to justify arson against homes that were known to house and deal crack cocaine. As retaliation, Detroit citizens lit fires to purge the epidemic they felt Detroit police were either unwilling or unable to solve.[39]

    The arson primarily took place in the inner city, but surrounding suburbs were often affected as well. The crimes became increasingly destructive. Over 800 fires were set in the peak year 1984, overwhelming the city's fire department. Hundreds of vacant homes across the city were set ablaze. In later years, the arson continued, but the number of fires was reduced by razing thousands of abandoned houses that often were used to sell drugs—5000 in 1989–90 alone. Every year the city mobilizes "Angel's Night," with tens of thousands of volunteers patrolling areas at high risk.[40][41]

    Problems[edit]

    Population decline[edit]

    As Detroit's abandoned houses have been demolished, gaps in the previously urban environment have emerged, which is sometimes called urban prairie.

    Further information: Demographic history of Detroit

    Long a major population center, Detroit has been going through a major reduction in population; the city has lost over 60% of its population since 1950.[42] A Michigan web site compares Youngstown, Ohio to Detroit on a much smaller scale due to its own economic problems.[43]

    Detroit reached its population peak in the 1950 census at over 1.8 million people, and decreased in population with each subsequent census; as of the 2010 census, the city has just over 700,000 residents, adding up to a total loss of 61% of the population.[44][45]

    A major change in the racial composition of the city also occurred over that same period; from 1950 to 2010 the black/white percentage of population went from 16.2%/83.6% to 82.7%/10.6%.[46] Due to the prevalence of the one-drop rule in assigning African-American race in the 20th-century United States, arguably a better comparison figure from 2010 is 84.3% marking African-American even if they marked some other race, and the 7.8% non-Hispanic white population of Detroit in 2010 might be a better figure to use for comparison figured.[47] Approximately 1,400,000 of the 1,600,000 white people in Detroit after World War II have left the city, with many going to the suburbs.[48]

    Unemployment[edit]

    According to the U.S. Department of Labor Bureau of Labor Statistics, of the 50 largest cities in the country, Detroit has the highest unemployment rate, at 23.1%.[49]

    Poverty[edit]

    The U.S. Census Bureau's Statistical Abstract of the United States: 2012 ranks Detroit first among all 71 U.S. cities for which rates were calculated in percentage of the city's population living below the poverty level. The individual rate living below the poverty level is 36.4%; the family rate is 31.3%.[50]

    Urban decay[edit]

    This map shows vacancy rates of housing units in Wayne County, Michigan, and also in the city of Detroit.

    Dance floor of the Vanity Ballroom Building in 2010.

    The Film Exchange Building in 2012.

    Detroit has been described by some as a ghost town.[51][52] Parts of the city are so abandoned they have been described as looking like farmland, urban prairie, or even completely wild.[48]

    A significant percentage of housing parcels in the city are vacant, with abandoned lots making up more than half of total residential lots in many large portions of the city.[53] With at least 70,000 abandoned buildings, 31,000 empty houses, and 90,000 vacant lots, Detroit has become notorious for its urban blight.[51][54]

    In 2010 Mayor Bing put forth a plan to bulldoze one fourth of the city.[55] The plan was to concentrate Detroit's remaining population into certain areas to improve the delivery of essential city services, which the city has had significant difficulty providing (policing, fire protection, trash removal, snow removal, lighting, etc.).[51] In February 2013 the Detroit Free Press reported the Mayor's plan to accelerate the program.[56] The project has hopes "for federal funding to replicate it [the bulldozing plan] across the city to tackle Detroit’s problems with tens of thousands of abandoned and blighted homes and buildings." Bing said the project aims "to rightsize the city’s resources to reflect its smaller population."

    The average price of homes sold in Detroit in 2012 was $7,500; as of January 2013 47 houses in Detroit were listed for $500 or less, with five properties listed for $1.[52] Despite the extremely low price of Detroit properties, most of the properties have been on the market for more than a year as buyers balk at the boarded up, abandoned houses of Detroit.[52] The Detroit News reported that more than half of Detroit property owners did not pay taxes in 2012, at a loss to the city of $131 million (equal to 12% of the city's general fund budget).[57]

    The first comprehensive analysis of the city's tens of thousands of abandoned and dilapidated buildings is set to be completed in Spring 2014.[58]

    Crime[edit]

    Further information: Crime in Detroit

    Detroit has some of the highest crime rates in the United States, with a rate of 62.18 per 1,000 residents for property crimes, and 16.73 per 1,000 for violent crimes (compared to national figures of 32 per 1,000 for property crimes and 5 per 1,000 for violent crime in 2008).[59] Detroit's murder rate was 53 per 100,000 in 2012, ten times that of New York City.[60]A 2012 Forbes report named Detroit as the most dangerous city in the United States for the fourth year in a row. It citedFBI survey data that found that the city's metropolitan area had a significant rate of violent crimes: murder and non-negligent manslaughter, forcible rape, robbery, and aggravated assault.[61][62]

    According to Detroit officials in 2007, about 65 to 70 percent of homicides in the city were drug related.[63] The rate of unsolved murders in the city is at roughly 70%.[64]

    City finances[edit]

    Further information: Detroit bankruptcy

    On March 1, 2013, GovernorRick Snyder announced the state was taking over the financial control of the city from the local government.[65] The state is requesting a review team to look over the financial state of the city and determine if an emergency manager is needed to take over control of city spending from city council.[65]

    On March 14, 2013, Michigan's Local Emergency Financial Assistance Loan Board (ELB) appointed an emergency financial manager, Kevyn Orr, effective on March 25, 2013.[66] In mid-May 2013, Orr released his first report on Detroit’s finances since he took the job.[67][68] The results were generally negative regarding Detroit’s financial health.[67][68] The report said that Detroit is "clearly insolvent on a cash flow basis."[69] The report said that Detroit will finish its current budget year with a $162 million cash-flow shortfall[67][68] and that the projected budget deficit is expected to reach $386 million in less than two months.[67] The report said that costs for retiree benefits are eating up a third of Detroit’s budget and that public services are suffering as Detroit's revenues and population shrink each year.[68] The report wasn't intended to offer a complete blueprint for Orr's plans for fixing the crisis; more details about those plans are expected to emerge within a few months.[68]

    After several months of negotiations, Orr was ultimately unable to come to a deal with Detroit's creditors, unions, and pension boards[1] and therefore filed for Chapter 9bankruptcy protection in the Eastern District of Michigan U.S. Bankruptcy Court on July 18, 2013, the largest U.S. city ever to do so, with outstanding financial obligations to more than 100,000 creditors totaling approximately $18.5 billion.[70][71][72]

    Set aside all the above....The property taxes are sky high in Detroit.  The Landlord/Tenant Court system is pro-tenant, however, my husband and I found one Judge who was fair and balanced, but she retired. 

    The thing that gets me about the residents of Detroit is that they don't squeal on each other.  They seem to KNOW NOTHING!  Of course they are afraid to talk, for fear of being killed. 

    So you need to think carefully, not just about a house being sold cheap in the City of Detroit, because there is a reason, but you need to think of the neighbors, will they help or hinder you?  The court systems.  The fact that Detroit has problems and how they will find every reason to fine you in order to bring in revenue.

    Time span for Police and Fire Fighters responses take anywhere between one hour to mostly two hours, I'm told, for them to arrive, because they have had to lay off so many of their members, and the crime is rampant and the fires is an everyday thing, so it's hard for them to keep up.

    Is this the stress you want in this life?

    Detroit most likely will come back eventually.  But not until the crime is taken care of. 

    If you want to pay a ton of money to invest in downtown Detroit, that's blooming, but are you Donald Trump?  Don't forget in order  to get to the pretty you need to go through the ugly.

    But I have to say that the City is trying to turn itself around.  It has been making headway. But it has a long way to go.  And if I were you, I would hold off and keep watching. 

    Nancy Neville

    Detroit, like any other market, has it's pluses and minuses. Every market isn't right for every investor. Detroit isn't for me, but it isn't because of the issues that is constantly reported, it's because my REI Business Plan isn't designed for $500-$20,000 rental units.

    On the other hand, I have a partner that is working with a CA investor and they are having a field day.  The dollar amounts, both cost and returns, are perfect for this investor.  There are a number of other large group investors that have a plan too.  They are buying up blocks/areas and taking control of them.

    Three things for success here:

    1 - You have to have big pockets. This isn't an REI market for the small investor (less than $5M...with more on the way)

    2 - If you are from out of the state, you MUST be working with a GROUP with "boots on the ground"

    3 - You MUST visit the area to see for yourself.  This doesn't mean a 1 or 2 day visit, and you must have a "tour guide" that knows the area...preferably your "boots on the ground".

    Detroit will be making big strides within the next 5 - 10 years (accelerating each year) because of the new politics (or lack of) in the City, the bankruptcy (reset button pushed), and the influx of federal funds, the "fixing of the City" is well on the way.

    This will be a great place to invest, for those that like to invest on the "ground floor"...I prefer one floor up though.

    @Joe Villeneuve is right on, I would quibble a bit with the $5 mil requirement, (though being able to buy a neighborhood greatly simplifies the need to identify stable areas) but overall the points are right on.

    Originally posted by @Ray Foley :

    Joe Villeneuve is right on, I would quibble a bit with the $5 mil requirement, (though being able to buy a neighborhood greatly simplifies the need to identify stable areas) but overall the points are right on.

     The $5M is based on the out of state investors I've been working with.  That's the number that seems to be magic to them....must be a reason.

    @Eric Bowlin  I'm sure marketable title is the "standard" in Detroit, as elsewhere.  Except when it comes to Ebay.  I've only browsed the EBay offerings a couple of times for Florida properties, just out of curiosity.  What I see are tax deed Junkers, with liens out the yazoo or permanently unbuildable lots, being offered by QCD or Special Warranty Deed (essentially the same thing, but "Warranty Deed offered" sounds good, right?).  They certainly are only bought by people who are obviously ignorant about what problems they are buying.  But hey, a vacant lot on a paved road in LeHigh acres sounds like a deal at $4800, right?  I've also seen similar south Florida tax deed Junkers offered by a couple of posters here on BP, briefly until they were outed.

    @Wayne Brooks  

      Lehigh is the poster child or antiquated subdivisions nation wide !!  Great subject to google earth and see miles of paved roads with the occasional house dotted in there.

    Much like the desert massive subdivisons of the west that were created in the early 20th century...

    The biggest risk is the risk of death or injury.  That's why most people would not get involved in the bad Detroit areas.  It's pretty scary in some parts of Detroit, especially if you are not a local.

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