  Iheartthed Member Username: Iheartthed Post Number: 2054 Registered: 04-2006 |
COUNTY FACES $6-MILLION LOSS Statewide crunch has yet to hit bottom, treasurer says ... "I don't think we've seen bottom yet," he said. "It will affect the state, but it will really affect local government." In Macomb County, taxable values are projected to increase 2.5% next year after many years of increases between 5% and 7%, Equalization Director Steven Mellen said. "If the trend continues, we could be seeing zero growth, or negative growth, in a few years," Mellen said. "There are already communities in Macomb that have negative growth, but I can cover their loss with gains in other parts of the county. But eventually, it could catch up." ... http://freep.com/apps/pbcs.dll /article?AID=/20071102/NEWS03/ 711020435/1001 Just an FYI. I have my own ideas about what needs to change, but two things are obvious 1) Michigan cannot continue down this path, and 2) there need to be immediate policy changes. The question is what needs to change? | ||
Jt1 Member Username: Jt1 Post Number: 10666 Registered: 10-2003 |
The decline will continue throughout the entire state. The Michigan housing market will not recover at the same pace as the national market due to the buyouts/layoffs of the auto industry. I don'e believe that we have seen the full effects of that | ||
Thejesus Member Username: Thejesus Post Number: 2582 Registered: 06-2006 |
This is mostly just the result of property values being way overinflated to begin with. If the area had never experience the short-lived "irrational exuberance" (as Bob Shiller puts it), then the overall trend would still be very positive... When you take out the numbers that results from the market getting way ahead of itself, Oakland county real estate has still been an excellent investment over the past 10-30 years... While there are things that can be done to make the region more attractive to prospective home buyers, pointing to the fact that inflated home prices came back down to Earth where they should be is not evidence of a downward spiral. | ||
Iheartthed Member Username: Iheartthed Post Number: 2055 Registered: 04-2006 |
This is mostly just the result of property values being way overinflated to begin with. Detroit area home prices have been among the lowest in the country for decades, yet they are showing among the biggest percentage decreases in this nationwide downturn. "Over-inflated" housing values just doesn't resonate with me... | ||
Thejesus Member Username: Thejesus Post Number: 2584 Registered: 06-2006 |
^that's because you weren't around to witness houses in the area that sold for around $150,000 in the late 1990s start selling for $300,000+ just 5 years later, and houses that sold for $300,000 going above the half-million dollar mark.... Anyone who thought these houses would continue to double every 5 years was kidding themselves... It's the same thing that happened in the stock market earlier this decade...prices were way up there and then they came back down to earth... people thought this couldn't happen with houses because houses actually serve a tangible purpose -- i.e., you can live in the -- but what they didn't grasp is that real assets can be over valued just the same as paper assets can, and while your house may not turn out to be worth zero like paper assets sometimes are, the values can and always do come back down to Earth when they are overinflated history will always repeat itself...the same exact thing happened with tulip trading in the Netherlands in the 1600s, believe it or not... | ||
Iheartthed Member Username: Iheartthed Post Number: 2056 Registered: 04-2006 |
^that's because you weren't around to witness houses that sold for around $150,000 in the late 1990s start selling for $300,000+ just 5 years later, and houses that sold for $300,000 going above the half-million dollar mark.... Where was I? | ||
Thejesus Member Username: Thejesus Post Number: 2585 Registered: 06-2006 |
^I assumed you were in New York already...If you were still here in the area, then I guess you just weren't paying any attention to what was going on around you | ||
Johnlodge Member Username: Johnlodge Post Number: 3344 Registered: 10-2003 |
"history will always repeat itself...the same exact thing happened with tulip trading in the Netherlands in the 1600s, believe it or not..." Ah yes, the great Tulip depression. I think I first learned about that on Head of the Class. That Mr. Moore was just a bastion of interesting knowledge. | ||
Thejesus Member Username: Thejesus Post Number: 2586 Registered: 06-2006 |
^lol...well, If you're at all interested in expanding your knowledge of the subject beyond rerun television, here's a recommended reading: http://www.amazon.com/gp/produ ct/060980765X?ie=UTF8&tag=orch idnights-20&linkCode=xm2&camp= 1789&creativeASIN=060980765X | ||
Johnlodge Member Username: Johnlodge Post Number: 3345 Registered: 10-2003 |
I just read the intro on Amazon, that looks like a fantastic read. /EndThreadjack | ||
Dougw Member Username: Dougw Post Number: 1968 Registered: 11-2003 |
quote: Ah... I was wondering where http://itulip.com got its name from, now I know.  The original market bubble burst. | ||
1953 Member Username: 1953 Post Number: 1479 Registered: 12-2004 |
History never repeats itself, since no two events are exactly similar. | ||
Spacemonkey Member Username: Spacemonkey Post Number: 255 Registered: 03-2006 |
I don't want to leave Michigan because I grew up here and my parents live here. But at this rate, it will be cheaper to move and take my parents with me. I dunno. Maybe go to Florida. Take the whole clan with me. | ||
Udmphikapbob Member Username: Udmphikapbob Post Number: 491 Registered: 07-2004 |
The previous owners of my house banked a 30% increase in value between 1998 and 2002. That's pretty irrational. Now, I knew all along that I wasn't going to get $200,000 for my 50-year-old, thousand-square-foot Livonia ranch in 2008, but I sure did think it would at least putter along at 2 or 3 percent! My hope is that gas prices go up even higher, so young families who work in Livonia, Dearborn or Detroit can't afford to commute from a new vinyl palace in Milford, and they come in and buy up all the nice old houses we have for sale in my neighborhood. Did I mention we have a new Wal*Mart? Must provide your own transportation, though. | ||
Iheartthed Member Username: Iheartthed Post Number: 2057 Registered: 04-2006 |
I assumed you were in New York already...If you were still here in the area, then I guess you just weren't paying any attention to what was going on around you The point is that for a market like Detroit, it was incredibly cheap to begin with. This is the rank of the top 20 metros by size, ranked by 2004 property values:  Here is the same list ranked in 2007:  Here is the list ranked by percentage change over the last year:  The list was pulled from here: http://www.realtor.org/Research.nsf/Pages/MetroPrice If the national market was so overpriced, then why didn't everyone show as steep of a percentage drop as Detroit? Detroit was cheap to begin with AND had the largest percentage drop. Even St. Louis showed a gain... | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1574 Registered: 07-2004 |
Oh snap! Look who wasn't paying attention! | ||
Thejesus Member Username: Thejesus Post Number: 2587 Registered: 06-2006 |
IHD: You need to compare apples to apples here. I'm talking about the metro Detroit real estate market today compared to 5 years ago (since Oakland County is the subject of this thread) while you're comparing metro-Detroit prices relative to national market prices. That is not going to tell you about whether home prices in this area were overinflated with respect to what buyers are willing to pay for houses in this area. I'm sorry if you were one of the people who thought home prices in this area would continue to double every 5 years. I really don't know what to tell you other than to say that the evidence tells us you were wrong. Home prices in this area have historically increased at a pretty steady single-digit rate for decades. The fact that they started increasing at double-digit rates for about a half a decade then gradually came back to single-digit rates is NOT evidence of a downward spiral. The fact that this region's home prices have historically been low and still are low compared to the rest of the country is irrelevant to determining whether they were overpriced with respect to what buyers are willing to pay for houses in this region. Now, if you want to compare apples to apples using an area that has historically had higher than normal home values relative to the rest of the country but is experiencing the same kind retreat back to reasonable levels as Detroit is, then look at Sarasota, FL on your list. (this doesn't really tell you anything, but since you think it does, have a look and you'll see that I'm right.) Now, let me be clear, again, and say that there are plenty of problems with this region that, if addressed, could make the area much more attractive to prospective home buyers. But pointing to declining home values while ignoring the fact that they were overinflated to begin with is not going to support that argument. | ||
Johnnny5 Member Username: Johnnny5 Post Number: 633 Registered: 06-2005 |
I'd like to know where in Oakland county home prices were doubling every five years? That's about a 15% annual increase and I don't remember seeing or hearing of that happening anywhere in Oakland County. | ||
Iheartthed Member Username: Iheartthed Post Number: 2058 Registered: 04-2006 |
But pointing to declining home values while ignoring the fact that they were overinflated to begin with is not going to support that argument. I'm not just pointing to declining home values. I'm pointing at how Detroit's home values were low to begin with, AND showed by far the steepest decline percentage wise. | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1579 Registered: 07-2004 |
May I interrupt? When we say "values" on this board, do we really mean "prices"? And that the housing is overpriced? Isn't "home value" just a homeowner's nice way of saying what price it would fetch? Just trying to strip a layer of double-talk... | ||
Iheartthed Member Username: Iheartthed Post Number: 2060 Registered: 04-2006 |
May I interrupt? When we say "values" on this board, do we really mean "prices"? And that the housing is overpriced? Isn't "home value" just a homeowner's nice way of saying what price it would fetch? Probably. I'm no expert on this (obviously). I'm just pointing out the oddities that I have observed. | ||
Thejesus Member Username: Thejesus Post Number: 2591 Registered: 06-2006 |
"I'm not just pointing to declining home values. I'm pointing at how Detroit's home values were low to begin with, AND showed by far the steepest decline percentage wise." And if over inflation hadn't been coupled with other factors -- i.e., had the decline ONLY been the result of laid off auto workers and people not wanting to locate here because of things like a lack of mass transit -- Detroit's decline would not be the steepest. Things will stabilize over the next couple years, however changes must be made for the region to realize its potential | ||
Thejesus Member Username: Thejesus Post Number: 2592 Registered: 06-2006 |
"May I interrupt? When we say "values" on this board, do we really mean "prices"? And that the housing is overpriced? Isn't "home value" just a homeowner's nice way of saying what price it would fetch? " Detroitnerd: That's true in some cases. However, when we're talking about real estate, Fair Market Value is the standard valuation that is used, which is determined by analyzing sale of similar properties by esestimating the PRICE at which an objective willing buyer and an objective willing seller would agree to a sale of the subject property . So, while a home owner might say that the VALUE of my property is higher than what I could sell it for, this is really an illogical statement (unless, of course, the property has unmarketable subjective value to that particular owner) | ||
Rooms222 Member Username: Rooms222 Post Number: 71 Registered: 04-2005 |
In previous threads related to this, I have mentioned that one analysis puts Detroit in the category of no significant rate of international immigration and net negative domestic migration (only a few from other countries are moving here on a net basis, and more American-born people are leaving than moving here). The other cities in this group are Fort Wayne, Flint, Toledo, Cleveland, Buffalo, Pittsburgh, Upstate NY and Non-eastern Pennsylvania, etc (all in a pretty contiguous area). All these areas are aging, not growing, and are really losing good paying manufacturing jobs. If you look at this group, we have the highest housing prices (but also have the most diverse economy to help prop things up). There may still be a lot of room to fall. Growth, and/or people migrating here to buy the houses (with the means to pay 2006 prices or above) are the easiest cure. Otherwise, expect further abandonment of some homes in the neighborhoods in Detroit and some inner-ring suburbs as potential residents find better deals (similar prices/lower taxes & insurance/better schools) in other suburbs.....There will be more houses than viable households, with a societal and economic cost for the creative destruction (with the hope for eventual recovery).... | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1580 Registered: 07-2004 |
It sounds almost like a stock-trading term. I think sometimes we use these words without knowing what they mean. But, if I get this right, the objective willing buyer has not been as interested in buying from the objective willing seller in the Detroit area, when compared to other metro areas in the United States. "Home values here have been much lower than elsewhere." So, when does something become OVERVALUED? When people are willing to pay others more than the objective willing buyer will? | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1583 Registered: 07-2004 |
Why do we say overvalued again? | ||
Mod Member Username: Mod Post Number: 114 Registered: 07-2004 |
I think sub-prime mortgages played a role in this "irrational exhuberance". Mortgages were given to people who, years before, may not have been approved for one. In effect, influencing upward pressure on prices. | ||
Thejesus Member Username: Thejesus Post Number: 2595 Registered: 06-2006 |
If a hypothetical willing buyer were willing to purchase "Greenacre" for $X.xx on date Y, then the fair market value (FMV) of Greenacre is said to have been $X.xx on date Y. However, if the FMV was based in part on the erroneous belief that Greenacre would retain its value or continue to appreciate for the foreseeable future, when if fact the opposite occurs, then we'd say that Greenacre was overvalued at $X.xx on date Y Now, since we're dealing with future events here, we could never had KNOWN that Greenacre was overvalued on date Y (for all we know, an oil well could get discovered under Greenacre one month after date Y, which would positively impact its value) which means that the present market value is based on speculation. What happened in metro Detroit over the last few years is that there were more people who incorrectly speculated that houses would retain or increase their value in the foreseeable future than there were people who correctly speculated that houses were overvalued. | ||
Onthe405 Member Username: Onthe405 Post Number: 2 Registered: 11-2007 |
Unless we see $10+ gallon gas in the near future (entirely possible) which would alter the lifestyle patterns away from the auto, Metro Detroit will always be a relatively cheap place for housing. This is due to a unique combination of local culture & geography. Culturally, Metro Detroit has no centralized location per se for jobs/commerce/culture (as in Chicago, Manhattan, San Francisco, or Seattle). The jobs in Detroit keep moving out further & further in all directions from the original core pre-auto era city (Chrysler's move to Auburn Hills is a typical example). In turn, the residents can move even further out into exburbs that are still commuting distance from the newly re-located employers (i.e. Clarkston). As previously mentioned, there is also no significant draw for new residents from other parts of the country. Detroit’s relatively cheap housing has resulted in the primary source of new residents, which are immigrants from outside the US. Economically, this "new blood" is the best thing metro Detroit can hope for, since the alternative is the city dying completely (cities like Flint MI, Gary IN, Akron OH are well on their way to becoming literal ghost towns). Although Detroit certainly isn't the the only metro area having emerged primarily on the post-auto era model (Los Angeles is probably the quintessential example), many of these cities have some type of geographical restriction to expansion. For example, NYC is on a series of 3 islands. Los Angeles is surrounded by mountains on one side, the ocean on the other. Due to flat geography & plenty of water, the expansion of metro Detroit has historically been boundless in all but one direction. This creates an essentially endless resource of cheap land for both businesses & housing developers. Economics is all about supply and demand. In Detroit, there is plenty of supply and relatively little demand. | ||
Thejesus Member Username: Thejesus Post Number: 2596 Registered: 06-2006 |
"I think sub-prime mortgages played a role in this "irrational exhuberance". Mortgages were given to people who, years before, may not have been approved for one. In effect, influencing upward pressure on prices." They absolutely did...they helped drive home values WAY above where they otherwise would have been. This forced many of us to sit on the sidelines and wait for these people to default on their loans and home values to come back down to normal before we jumped into the market. And its not over yet, but all indications are that we're closer to the end of this thing than to the beginning. | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1586 Registered: 07-2004 |
Well, if you introduce a sudden supply of buyers, that may well happen. But I still don't understand exactly how something becomes "overvalued." | ||
Iheartthed Member Username: Iheartthed Post Number: 2061 Registered: 04-2006 |
^How many subprime loans were the original mortgage as opposed to an equity loan? | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1587 Registered: 07-2004 |
Man, TJ, when I read posts like this: "This forced many of us to sit on the sidelines and wait for these people to default on their loans and home values to come back down to normal..." I say to myself, 'There's a guy without an ounce of empathy.' Your attitude is, let them lose their shirt. Then, once all of those poor people have ruined themselves, everything will be OK. Do you realize that their children will be taking care of you in your old age? You seem to have no sense of compassion or community. In fact, you remind me of that song by Dead Kennedys: Kill the Poor. "The sun beams down on a brand new day No more welfare tax to pay Unsightly slums gone up in flashing light Jobless millions whisked away At last we have more room to play All systems go to kill the poor tonight Gonna Kill kill kill kill kill the poor Kill kill kill kill kill the poor Kill kill kill kill kill the poor tonight." (Message edited by detroitnerd on November 02, 2007) | ||
Thejesus Member Username: Thejesus Post Number: 2597 Registered: 06-2006 |
^hmmm, I don't know what to tell you...I think you read a bit too much into my statement. We were talking about textbook real estate valuations and you turned it into a discussion on social responsibility. But I will say this...I'm not the one who told these people to take out these loans without doing their homework first, and even if I warned them against it, well, I'm not the boss of them so it likely wouldn't have made any difference. And once they decided to go ahead and take out these loans, I certainly was not about to turn the problems they created for themselves into my problem by paying inflated real estate prices. btw, we're not talking about poor people here...we're talking about people who don't live within their means, and they come from ALL classes. | ||
Jt1 Member Username: Jt1 Post Number: 10673 Registered: 10-2003 |
I agree with TJ. I feel bad for the situations that some people are facing even if they brought it on themselves. That does not change the fact that I would jump at the opportunity to purchase a home at a deal if I were looking to move. One can be empathetic while still looking out for the best interests of themselves and their family. | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1588 Registered: 07-2004 |
Not my problem... -The epitaph of America | ||
Thejesus Member Username: Thejesus Post Number: 2599 Registered: 06-2006 |
whatever. how many people have you bailed out of a bad real estate decision by over paying them for their houses just so that they didn't have to take a loss? yeah, that's what I thought. | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1589 Registered: 07-2004 |
TJ: The idea is that a society works together, mitigates the damage predatory institutions do, and works for the commonweal. Either that, or a society descends into madness. Someday, maybe, you'll find you have a problem so big you can't solve it yourself. Hope you come around by then... | ||
Oakmangirl Member Username: Oakmangirl Post Number: 581 Registered: 08-2007 |
overvalued... An even better indicator of how divorced home prices are from their underlying economic value is the price-to-rent ratio...Or why would an investor buy a property that rents for far less than his mortgage and other costs? Rent is a reality check because it reflects the actual earnings power of the asset. Overvaluation occurs when people buy anyway owing to speculation (tulips, dot.com, etc.) that the value will increase...a lemming effect occurs. Subprime loans made it worse with the poor ending up especially hard hit. Interestingly, from an international perspective, we didn't have a huge "bubble". | ||
Thejesus Member Username: Thejesus Post Number: 2600 Registered: 06-2006 |
come talk to me when you agree to perosnally take on the mortgage of someone who paid $300k for a $250 house just so they can be free of the situation they put themselves into. until then, you can quit with the "holier than thou" bullshit... | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1590 Registered: 07-2004 |
All that anger inside one little person can't be healthy... | ||
Oakmangirl Member Username: Oakmangirl Post Number: 583 Registered: 08-2007 |
I'd rather do that than unwillingly bail out a bank/lender or fund a military machine. | ||
Detroitnerd Member Username: Detroitnerd Post Number: 1591 Registered: 07-2004 |
I'd give everything I own to live in a more equitable society. I get the sense TJ would let society go to hell to hold onto everything he has. Which kind of citizen produces a greater country? | ||
Thejesus Member Username: Thejesus Post Number: 2601 Registered: 06-2006 |
you appear to have a lot of hate for conservatives and you're trying to characterize me as one so you have someone to throw your frustration towards... The truth is, none of traits that you have assigned to me in this thread are accurate. But if it makes you feel better to pretend like they are, by all means, pretend away. Makes no difference to me. Leaving to go out to dinner now. Good luck. | ||
French777 Member Username: French777 Post Number: 259 Registered: 10-2006 |
Still the Best Schools in Michigan in OAKLAND COUNTY | ||
Iheartthed Member Username: Iheartthed Post Number: 2062 Registered: 04-2006 |
Still the Best Schools in Michigan in OAKLAND COUNTY ...and that's not really saying a lot... | ||
Gistok Member Username: Gistok Post Number: 5632 Registered: 08-2004 |
What has not been mentioned on this thread is that probably 90% of all Michigan homeowners are going to see a tax increase in their property taxes REGARDLESS of whether or not their home values have dropped or even stayed the same. That is due to the Proposition A valuation of their houses (which has been set by law to increase no more than the cost of living increase or 5%, whichever is lower). This figure is lower than the SEV (State Equalized Value) for all homeowners who have had their homes for more than a few years. Most Michigan homeowners who have had their property more than a few years have their SEV value set as thousands of dollars above their Prop. A value. So even though many folks property values have dropped, their property taxes will continue to rise until the Prop. A tax rate reaches the SEV level. So in the case of Oakland County, most of the residents will still see their property tax bill increase. Only new or recent homebuyers will see a decrease. So in Oakland County, the 5.2% decrease will only cause a 1/2% decrease in actual property tax reduction. For the county that's not as bad as one would otherwise think. But it sucks for most homeowners... | ||
Gistok Member Username: Gistok Post Number: 5633 Registered: 08-2004 |
What Thejesus said about high home price increases coming home to roost is true... I purchased a ranch in SCS in 1990 for $84,000, while at the same time a buddy purchased one in the north end of Royal Oak (14 Mile & Woodward) for $92,000. Between 1990-2005 my house value increased at a steady clip to $150,000. My buddy's increased at leaps and bounds to about $250,000. Now with the "adjustment" of home values... in 2007 my home value is about $135,000... and his is downt to $190,000. Mine dropped $15,000 (not a big deal)... but his dropped $60,000. That's quite a correction! But even with the excessive exhuberance in home value increases in Oakland County... his was the better long term investment. But it's the new time buyers (2000-2005) in the Oakland County boom that are really hurting now. Whereas new (2000-2005) Macomb County buyers are suffering less so than in Oakland County. | ||
321brian Member Username: 321brian Post Number: 493 Registered: 02-2006 |
It's about time this happened. I fought my assessment last year. My taxable value went up while the listing price on my place that has been for sale almost 2 years went down below what I paid for it 4 years ago. Still not takers. This is a good thing. I believe the county was taxing a lot of people away from buying homes. It is going to take years for my place to realize it's taxed value and that is if it stays the same for the next 5 years. | ||
Miketoronto Member Username: Miketoronto Post Number: 727 Registered: 07-2004 |
You guys think Metro Detroit home prices are inflated? I do not believe that for a min. My cousins have monster houses in suburban Detroit that are worth the same as my bungalow here in Toronto. Metro Detroit has some of the best and cheap house prices. Where else can you get a monster 4,000 sq foot house for 500,000 or less. | ||
Novine Member Username: Novine Post Number: 224 Registered: 07-2007 |
The west side of the state. Oakland County is not affordable when compared to housing prices over on the Lake Michigan side of the state (except on the Lake, of course). | ||
Sstashmoo Member Username: Sstashmoo Post Number: 548 Registered: 02-2007 |
Quote: "have monster houses in suburban Detroit that are worth the same as my bungalow here in Toronto." Only because our currency has dropped by 40% in the last few years under the current leadership. | ||
Rhymeswithrawk Member Username: Rhymeswithrawk Post Number: 1009 Registered: 11-2005 |
Well welcome to the club, O.C. | ||
Crawford Member Username: Crawford Post Number: 143 Registered: 10-2006 |
Mike, forget $500,000. You can get a monster house in exurban Detroit starting around $250,000. Granted, you will be out in the sticks with nothing but WalMart and Applebees, but I guess that's what some people want. |
