Detroit’s houses are not doing well in auctions… Guess what’s wrong?
A recent property auction in Wayne County had very few takers according to Reuters . The minimum bid was set at $500 but not everyone was able to own a house, not because they don’t have a little more than $500 to spare but because they were competing against investors.
Such was the sentiment of those who didn’t leave the venue – the ballroom of a bankrupt casino, where Ron Wallace “… 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.'”
Well, Mr. Wallace, you’re not alone. In a city that resembles a ghost town where many parts are inhabited by squatters in abandoned homes, we all want a piece of the pie. But investors who believe that the market is already starting to rebound can foil your plans for home ownership. It’s not that they want to deprive you of your right to purchase a bargain home, it’s just how free market works. And we’ve all been victims of that.
But Mr. Wallace should set his sights in other areas not just in Motor Town. Bargain auctions are plenty in California, Florida and even Nevada. He can always find an auction where competition is less severe. Too bad, he’s had to compete for rundown units against big time buyers in Detroit.
But what does this tell us?
First, there’s an evident resurgence of investors interested in the city already deserted by its long-time residents. It may be a good sign but as to how much they can put their investments and for how long, it’s still too difficult to gauge.
Second, since car companies are struggling and going bust, there’s still no possibility that these houses can be flipped as fast as the years prior to the recession. In the end, it’s still a big gamble.