James Melton ended up at an estate sale on Outer Drive this spring
and that got him thinking about looking for a bargain house in Detroit.
An
online search popped up a five-bedroom house in Indian Village for
$19,900. Melton, 49, communications manager for Inforum, asked his
Facebook friends to talk him down. "This has to be a bad idea, right?"
His
friends expressed concern about potential mold, broken pipes, old
wiring, huge heating bills and foundation issues. Others thought the
price was right, no matter what he found inside.
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Read more: Freep.com/buyfor2012
As median home prices seem parked below $10,000 in the city, some buyers say the time is right to claim a piece of Detroit.
Those
buyers include a couple who relocated from Pennsylvania last year to
buy a three-bedroom brick house on Detroit's west side for less than
$60,000 that needed no work and a California couple who bought a
fixer-upper in Indian Village last year that has taught them a thing or
two about contractors, patience and the beauty of the city.
"This
is like the cost of a car," Melton said about the Indian Village home.
He, his wife and 10-year-old son have a house in East English Village
that's lost three-fourths of its value and has made him feel stuck.
"One
of the options is to take a chance on a Detroit place that is selling
very low," Melton said. "The money pit aspect of it worries me more than
the Detroit aspect. I've been living in Detroit so long maybe I'm used
to it. You have to be smart. You can't willy-nilly buy a house in
Detroit. You have to know about the neighborhood."
When he first
moved to the city 15 years ago, he looked for areas with strong
neighborhood associations, took note of how the neighbors tended their
lawns and toured the area at night to make sure they still liked it.
He
said the biggest drawback to living in the city hasn't been crime, the
schools or the city's budget. It's been the higher insurance costs.
"I think the advantages have outweighed the disadvantages," he said.
Much
of the inventory for sale in Detroit is priced under $75,000, according
to a first-quarter report by Real Estate One in Southfield.
During
the first quarter, there was a 4.7-month supply of houses priced under
$75,000. A normal market is from three to six months of supply and a
buyer's market is more than six months of supply.
The city overall had a 4.9-month supply of houses for sale in the first three months of the year at the current sales pace.
Under $10,000
So what can you get for under $10,000? Realtors warn that you get what you pay for so expect to put some work into these houses.
Tim
McGary, associate broker at Prestige Realty and Investments in
Farmington Hills, sold a brick colonial with three bedrooms and one
bathroom on the east side in April for $2,000. The privately owned home
had been on the market for six days and was listed for $1,999.
McGary
said that buyers can still find houses that are well-built for under
$10,000 and some in nicer areas. They will likely be stripped of the
copper plumbing, hot water tank, furnace and maybe even the sinks and
toilets.
"To get a house like this livable, if they put in $10,000 on the
high end
they can have a very nice house," McGary said. "The quality of the
homes in the city of Detroit has other cities beat. And if you find that
quality of homes in the suburbs it is quite expensive."
He said that Rosedale Park is one of the better neighborhoods in which to find good bargains.
Trista
Redfield, a Realtor at Century 21 Riverpointe in Grosse Ile, said many
of the homes under $10,000 are missing things like kitchen cabinets and
radiators. She also sees a lot of U.S. Housing and Urban Development
homes.
"Most HUD homes in Detroit are under $10,000. Once you
cross over into Harper Woods or Redford you are up into the $20,000 or
$30,000 range for the same house," Redfield said.
That price will buy a brick bungalow with up to 1,200 square feet with no furnace or hot water heater, she said.
"But
they tend to be good, solid homes with basements and some character,"
she said. "We've seen some with fireplaces and built-ins, but those tend
to go quickly."
$10,000 to $99,999
Blake Maurice, 33, moved back to the area from Pennsylvania last year
with his wife, Amy, 31. Blake, who works for a payroll company, and
Amy, who works at Starbucks, knew they wanted to live in the city. Amy
Maurice grew up in the Brightmoor neighborhood.
With family on the west side, Detroit's Rosedale Park neighborhood came up pretty quickly as a place to look. The couple attended a neighborhood open house last year and wanted the first one they walked into. The brick 1 1/2-story home has three bedrooms and 1.5 bathrooms, nearly 1,400 square feet, hardwood floors throughout, solid wood doors and some of the original
hardware. The purchase price was $55,000 and it had been rehabbed by the
Grandmont Rosedale Development Corp., and had a new furnace, windows,
air-conditioning and refinished floors.
"We love it. We just like
the variety and the reality of the city, you know," Blake Maurice said.
"It's a price that is very accessible to the average person."
Novi
Realtor Mark Zawaideh of Keller Williams Realty said that investors are
making most of the purchases in the city and that is beginning to
change because of the falling prices elsewhere. He said investors are
able to pick up houses in places like Garden City and Westland for the
prices they used to pay in Detroit -- $20,000 to $50,000. The suburban
rentals attract better renters because of the schools, he said.
And that could leave more good buys available for owner-occupants.
"With a median sales price of $9,000, if that doesn't attract someone I don't know what will," he said.
The
low prices
were part of what lured Aislinn Scofield and Scott Koue, a San
Francisco couple, to Detroit for a vacation in the fall of 2010. Once
back in California, Scofield found a five-bedroom Indian Village house
on an auction site and put in a bid she thought was almost too
ridiculous to be accepted.
Turns out it wasn't. The couple ended
up buying the house without seeing it for $50,000. The house had been
vacant for two years, so it needed some work. Through May, the couple
had spent $60,000 to $70,000 on repairs for the 3,600-square-foot house
with four bathrooms and two fireplaces built in 1909.
"It's a simple house, but we love it," Scofield said.
The
work they have done was extensive, including replacing burst copper
pipes and opening up 10 walls and three ceilings to do it, replacing
broken radiators with a forced-air system, and fixing a second-floor
back porch.
"Even after all the work, the house will be a
bargain," Koue said. "There are times when I wonder what I was thinking.
We both came here not sure what to expect. It turned into being a
really happy experience."
$100,000 and up
J.R. Szwarc, a Realtor with Re/Max Gallery in Livonia, said he's been
getting more phone calls from buyers who want to look for houses. He
just sold one in the University District for $129,000 that was listed
for $139,000.
But there are still a number of foreclosures and short sales.
"Unfortunately
on short sales, the banks take too long to make a decision. If they
picked up the pace, a lot of these houses would sell and they wouldn't
be trashed," he said.
Austin Black II, president and broker at
City Living Detroit in Midtown, said that inventories are getting slim
in some of the city's best neighborhoods such as Palmer Woods and
Sherwood Forest.
"If you look at University District, Indian
Village, Boston Edison, those have traditionally been Detroit's
strongest neighborhoods," he said. "People who bought at the peak of the
market won't even consider selling until the market improves more."
And at Willys
Overland Lofts, the condo development Black has listed, six units were reserved this spring ranging from $200,000 to $400,000, he said.
"For
most of the people I'm working with, the space and the location seem to
be more important than anything else," Black said. "People have a more
positive outlook about the economy, and people are prepared and willing
to invest in real estate again.
"Yes, there are still $100 houses in Detroit, but not in the neighborhoods you necessarily want to live in."
Contact Greta Guest: 313-223-4192 or gguest@freepress.com
More Details: About this series
The
Free Press looked at a sampling of closed sales and data over the past
year in Detroit and spoke with local real estate experts to determine
the state of the market.
This is the fourth installment in a series about housing markets around the state.
