In Detroit, houses cheaper than cars
Job losses, a moribund real estate market and rising home-financing costs have made the Motor City the national leader in foreclosures.
By Reuters
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With bidding stalled on some of the least desirable residences in Detroit's collapsing housing market, even the fast-talking auctioneer was feeling the stress.
"Folks, the ground underneath the house goes with it. You do know that, right?" he offered.
After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: "The lumber in the house is worth more than that!"
As Detroit reels from job losses in the auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property.
It also stands as a case study in the economic pain from a housing bust as analysts consider whether a developing crisis in mortgages to high-risk borrowers will trigger a slowdown in the broader economy.
The rising cost of mortgage financing for Detroit borrowers with weak credit has added to the downdraft from a slumping local economy to send home values plunging faster than many investors anticipated a few months ago.
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At a weekend sale of about 300 Detroit-area houses by Texas auction firm Hudson & Marshall, the mood was marked more by fear than greed.
"These people are investors, and they know the difficulty of finding financing. They know the difficulty of finding good tenants. They're cautious," said real estate agent Stanley Wegrzynowicz, who attended the auction.