  Alexei289 Member Username: Alexei289 Post Number: 1071 Registered: 11-2004 Posted From: 68.61.183.223 |
http://moneycentral.msn.com/co ntent/Banking/Homebuyingguide/ P85324.asp?GT1=7925 Out of the 276 Metro areas surveyed we are ranked 270 in terms of home value appreciation... WAY far behind several much less important economic centers... THe bottom part of the list was rounded out by several other Michigan cities like Flint and other rustbelt regions.... this is not good people... Real Estate is the last vestage of wealth in this country.. since it cannot be outsourced and it IS our savings... Since we dont save anymore.. Once this falls, then we truely are done as a region... | ||
Ray1936 Member Username: Ray1936 Post Number: 388 Registered: 01-2005 Posted From: 207.200.116.139 |
As a C of D employee from 1955-1984, I was required to live in the city (in those years). Never got much appreciation on my homes. Then I retired and moved to Las Vegas. Here's my home buy/sell history: 1958: Bought 19940 Lindsay, 12,500 1971 Sold 19940 Lindsay, 17,500 1971: Bought 20001 Houghton, 24,000 1977: Sold 20001 Houghton, 27,500 1977: Bought 15505 Warwick, 32,000 1984: Sold 15505 Warwick, 52,000 1984: Bought 4571 McMillan, Las Vegas, 100,000 2006: Sold 4571 McMillan, Las Vegas, 305,000 (House being built in Henderson, 285,000) | ||
Rustic Member Username: Rustic Post Number: 2244 Registered: 10-2003 Posted From: 130.132.177.245 |
Ray1936, too bad what happens in vegas stays in vegas ... btw Ray1936, if ya would have stuck it out 22 years on Warwick you would have like appreciated ~100 grand. (was yer house the one with the big Ham antenna?) | ||
Upinottawa Member Username: Upinottawa Post Number: 250 Registered: 09-2005 Posted From: 198.103.184.76 |
This just shows how big the region's problems really are. Well, Metro-Detroit, better keep staying on this visionless course. Ray, too bad you didn't move to Vancouver in 1984: http://www.ctv.ca/servlet/Arti cleNews/story/CTVNews/20060321 /vcr_house_prices_060321/20060 321?hub=Canada "Vancouver's housing prices have seen wild increases in recent years, jumping 29 per cent in the past year alone and 80 per cent since 2002. "If we took the last four years and we had the same kind of price increases over the next four years, the average single detached home in Greater Vancouver will be over $1.2 million," Muir told CTV News. A single, detached home in the Greater Vancouver area now averages $700,000. That house will likely need some work." | ||
Dougw Member Username: Dougw Post Number: 1034 Registered: 11-2003 Posted From: 136.1.1.101 |
Past performance is no indication of future returns. Buy low, sell high.  Also, poor real estate appreciation is not the source of SE Michigan's problems, it's more of a side effect. | ||
Ray1936 Member Username: Ray1936 Post Number: 389 Registered: 01-2005 Posted From: 207.200.116.139 |
Rustic, I was two doors north of the guy with the ham antenna. The one in between (15491) used to be owned by Billy Rogell. Y'know, money aside, each of those homes were happy places with warm memories. And that's worth anything more than money can buy. I've been fortunate. | ||
Rustic Member Username: Rustic Post Number: 2246 Registered: 10-2003 Posted From: 130.132.177.245 |
Ray1936, got it ... that block of Warwick is really nice esp that cluster of houses along that side of the block along the greenbelt where you lived. Nice nice stuff ... still is ... that ham radio house fascinated me as a kid, such an elaborate antenna ... | ||
Sknutson Member Username: Sknutson Post Number: 481 Registered: 03-2004 Posted From: 67.114.23.202 |
Turning lemons into lemonade, the Detroit region has what so much of the rest of the country lacks - affordable housing. If corporations were to relocate to the area from some of the overheated housing markets, their employees could trade up and have lots-o-cash to boot! | ||
Ray1936 Member Username: Ray1936 Post Number: 390 Registered: 01-2005 Posted From: 207.200.116.139 |
Rustic, all the neighbors used to take turns cutting the grass on the center island, and it always looked neat. In the spring, we'd have a block party and plant flowers on the ends. When I was by there last year, looks like the traditions have carried on; appearance has not suffered a bit. BTW, the original installer of that antenna put it up about 1980 or so. Sometimes I could pick up his conversations when watching WDIV or one of the low-band TV channels. | ||
Eastsidedog Member Username: Eastsidedog Post Number: 42 Registered: 03-2006 Posted From: 69.220.142.7 |
Sknutson, way to look on the bright side! | ||
Bvos Member Username: Bvos Post Number: 1329 Registered: 10-2003 Posted From: 66.238.170.51 |
Ray, The person that bought the house from you still lives there. It now has a value of around $160,000 (SEV x 2). Sounds like you missed out of the real increase in value. Do a search from this website to check it out: https://is.bsasoftware.com/bsa .is/AssessingServices/ServiceA ssessingSearch.aspx?i=1&appid= 0 | ||
Eastsidedog Member Username: Eastsidedog Post Number: 44 Registered: 03-2006 Posted From: 69.220.142.7 |
Bvos, I know what you're saying. Property values have really shot up in the city in recent years. That's why people are flipping out about high property taxes. | ||
Livernoisyard Member Username: Livernoisyard Post Number: 338 Registered: 10-2004 Posted From: 69.242.223.42 |
Eastsidedog: If **all** assessed properties in a taxing district rise by the same percentage, there should be little effect in a person's property tax. The actual spending (plus debt service) by the locality is almost always the main culprit for increased property taxes. The mil rate is determined after an estimate of the local spending has been made. It will be adjusted up (or rarely, downward) depending upon how much tax revenue is needed. In simplistic terms, the following equation can be used to figure the property tax for a property: Property tax (local) = (property value}/(sum of all property values) * (local spending) * (mil rate) (Message edited by LivernoisYard on March 23, 2006) | ||
Billybbrew Member Username: Billybbrew Post Number: 139 Registered: 07-2005 Posted From: 205.188.116.137 |
Pretty sad that even Flint (2.50%) and Gary, Indiana (6.71% WTF????) have higher appreciation that us. Though it could be worse, we could live up in Bay City where it's less than 1%... SKnutson...very good marketing strategy...would bring in dollars and possibly raise that appreciation rate, though hopefully in a stable way and not a crazy way. Of course, we'd need some city services to offer first.... I wonder how it breaks down city vs. various suburbs since that was mainly suburban Wayne Co. and Detroit. | ||
Eastsidedog Member Username: Eastsidedog Post Number: 48 Registered: 03-2006 Posted From: 69.220.142.7 |
Livernoisyard, I'm referring to the uncapping of taxes when someone buys a house in the city. Since the houses are actually worth something now, they actually have real tax bills attached to them. | ||
Eastsidedog Member Username: Eastsidedog Post Number: 49 Registered: 03-2006 Posted From: 69.220.142.7 |
Really, I don't understand that study at all. In some parts of Detroit proper home values have skyrocketed in recent years. Houses once worth $20,000 4 years ago are now fetching upwards of $100,000. Other parts of the region must be dragging Detroit's statistic down. | ||
Alexei289 Member Username: Alexei289 Post Number: 1072 Registered: 11-2004 Posted From: 68.61.183.223 |
And it is... in another Detroit news article, I did read that Macomb county appreciated 1%, in 2005, and that Each of the Grosse Pointes except for the shores actually lost value (slightly). I will post if I can find it.. If people can get SOOOO much more house for their money here... why arent people moving here then?? Go figure... Maybe because people think NOT LIVING HERE is worth the extra 200,000$. I really think its THAT bad... | ||
Brandon48202 Member Username: Brandon48202 Post Number: 78 Registered: 12-2004 Posted From: 71.144.82.169 |
Housing markets are not 100% efficient, lack of knowlege/fear of Detroit is one reason for depressed values in the city. | ||
Upinottawa Member Username: Upinottawa Post Number: 253 Registered: 09-2005 Posted From: 198.103.184.76 |
Alexei, I would bet jobs (or lack thereof) are the number one reason keeping people away from the area. | ||
Jimaz Member Username: Jimaz Post Number: 529 Registered: 12-2005 Posted From: 68.2.191.57 |
When hearing of my decision to move from Phoenix to Detroit, my financial advisor immediately mentioned the cheap housing there. It was as if he had been tracking the situation all the way from Phoenix. If the appreciation's that low though ... maybe he was just kidding. | ||
Livernoisyard Member Username: Livernoisyard Post Number: 341 Registered: 10-2004 Posted From: 69.242.223.42 |
Alexei289: Yell "bingo!" You won. The first three basic tenets to learn as a real estate broker, salesman, or developer are: Location, location, location. Detroit fails in all three areas. It doesn't matter to a prospective home buyer if the typical reasons for not locating in Detroit (lousy schools and teachers, high crime, grittiness, fewer jobs, etc.) are real or not. Perception can be reality, especially when a major purchase--such as a house--is considered. (Message edited by LivernoisYard on March 23, 2006) | ||
Ray1936 Member Username: Ray1936 Post Number: 392 Registered: 01-2005 Posted From: 207.200.116.139 |
Bvos, yeah, I know, I said hi to them last year. Nice couple. When we sold the house to them in '84, we left a floral arrangement for them on the kitchen counter wishing them well. Funny story. My neighbor to the north was Dick Kolasinski. My neighbor to the south was his sister and her husband. I always told the world I lived between the north Pole and the south Pole. | ||
Northend Member Username: Northend Post Number: 810 Registered: 10-2005 Posted From: 69.212.51.105 |
we're not in Detroit for property value appreciation, we're in Detroit for the quality of life, its safe environment, great schools, racial bonne entente, jobs, etc... I just don't get that Detroit bling bling let's-make-a-quick-buck-mental ity just to buy some two tone shoes and a feather hat to go out on a Friday night in Harmonie Park and sip on a $12 cocktail! Gooooooosh.....so ghetto!!! | ||
Tomoh Member Username: Tomoh Post Number: 103 Registered: 11-2004 Posted From: 68.40.205.183 |
Brandon48202 makes an excellent point. Markets aren't perfect. The effect of misinformation leading to emotional decision-making probably play a significant role in (the city of) Detroit's real estate market. Maybe improving perception (if not also the reality) is one of the easier or cheaper things to change? | ||
Bvos Member Username: Bvos Post Number: 1332 Registered: 10-2003 Posted From: 64.148.226.17 |
Yeah, OK Northend. Ray1936, glad to hear you still come around and visit the old stomping grounds. You were just a stone's throw from my place. It's still a great neighborhood with great neighbors. LivernoisYard, do you live in Michigan? Do you know how property taxes are calculated here? Your formula for millage rate is no where close to correct. This may be how other states do it, but Michigan is totally different and far more complex. | ||
Huggybear Member Username: Huggybear Post Number: 185 Registered: 08-2005 Posted From: 68.79.92.248 |
Real estate as an investment is something of a scam - you have to consider that with inflation, the dollar halves in value about every 14 years. So unless your property value is more than doubling in that period, you might as well be looking at something else. Ditto if your house is appreciating slower than the interest rate on your note minus your interest deduction. Ray's example is interesting when you crunch the numbers. Using purchasing power parity (the Consumer Price Index), Ray's house on Warwick was just below the pace of inflation. Ray's house on McMillan appreciated a couple of points past inflation. It's kind of interesting when you consider the inflation factor (but not interest rates) how little the spread is between "cold" and "hot" markets. But this only works if the two properties are being studied for the same time period. Look at the Las Vegas house another way - divorced from inflation and in terms of the interest rate. The effective interest rate (appreciation) on Ray's "hotter" property is just over 5.2% over 22 years. Were there investments that beat 5.2% in the 1980s? Yes. But then look at it against the mortgage. How many home mortgages are selling at 5.2% or less (consider that the prime rate was never lower than 11.5% in 1984, when the first Las Vegas house was purchased). The situation gets worse if you then sink cash into the house. How many houses make it 22 years without needing work? If your tax bracket is not high, the mortgage interest deduction is not going to do much to close the gap between your mortgage and appreciation - just making a rough cut, you would need to be taxed at 50% effective rate to close the gap between 7.5% and the appreciation. Looking at the historic interest rates, the gap between Warwick and McMillan might actually be smaller than the inflation-based measure might suggest - since interest rates were almost double by the time he bought the Las Vegas house. The bottom line of all of this is that you should buy a house if you like it, but don't think you're going to get rich. Anyway, I'm sure some CPA on this forum will have something to add about this stuff. | ||
Rustic Member Username: Rustic Post Number: 2248 Registered: 10-2003 Posted From: 130.132.177.245 |
HB, although I agree with your bottom line, it is not necessarily as bad as you paint it. IF you flat out pay $$$ for your house it is as you describe, BUT if you mortage a significant part of the house's value (as virtually everyone under retirement age does when purchasing a house) your $$ investment in the house is much much less than it's purchase price and thus you return on your investment is higher than you are calculate. In other words, compare not the value of the house sunk into some other investment but instead the amount you sunk into the house at the begining of your purchase plus the amount you pay each month (mortage, taxes, insurance, maintenance ...) MINUS what you'd pay in rent living elsewhere (ya gotta havea roof over yer head). It is not necessarily as bad as you'd think esp when you consider the rent factor. Although it can be upside down too if rents are cheep ... where I am living now in the east coast due to the realestate bubble and wildly speculative investing things are right now actually upsidedown, a saavy shopper now can RENT a nice house for about 1/2 to even 1/3 of the burn rate of purchasing an identical house! IMO out here if one was starting out right now at least near term it would be better to rent and sink as much of the difference into savings (ideally, tax sheltered or tax differed as much as possible to mimic the mortage interest deduction, a young person starting out can often easily and invisibly do this simply by maxing out his 401k and then additional IRA participation -- an excellent habit to get into). Metro Detroit is another story tho, in a metro area where 300k$ gets you just about any house you could reasonably want in pretty much any area you could reasonably want to live in, shit that's peanuts -- ya gotta live somewhere ... Of course in metro Detroit you have to face the very real possiblility that your home may be worth LESS in constant dollars when you sell it than when you bought it. This was the case with a huge fraction of city of Detroit homes for several decades and more recently in some innerring suburbs. With the intractable dificulties facing the region it is likely that housing prices will flatten or dip pretty much across the borad. The recent building boom both inside the GB loop and the distant exurbs is ontop of an extraordinarily large stock of existing housing nearby so that's a crapshoot too. (Casinos aren't the only form of legal gambling in Detroit!). Anyway HB even then your losses are not as bad as you were initially calculating. Another issue to consider is what you get for the $$, In Ray's case I guarantee in each move he was making a siginificant improvements in his QOL by moving to better and better homes in better locations. He was actually quite fortunate moving within the city as he did in the 70's instead of moving to the suburbs, he would have increased his burn rate for a lesser home had he moved out to say a new subdivision in FH vs a nice prewar tudor or post war colonial in South Rosedale park. Another way to look at it is: can you do better investing long term on Wall Street than in your personal house? Probably. Will a bank lend you 250k$ to try it? NOPE. Yay modern day American Indentured Servitude -- where it is a "smart" move to do into lifetime debt to have a roof over yer head. God Bless America! ps -- in case ya can't tell I ain't a CPA, lol! | ||
Eastsidedog Member Username: Eastsidedog Post Number: 52 Registered: 03-2006 Posted From: 69.220.142.7 |
Livernoisyard, regarding location, location, location, Detroit's location has significantly improved over the last 10 years hence the rise in property values and new construction. It is still a risky investment but as a result there is potential for more return. 10 or 20 years ago it was very risky but people who bought then may see even more return in the end. Here's an example from my neighborhood: In the seventies two infamous/famous (depending who you ask) residents of the West Village area (next to IV) ((Cheryl Huff and her husband)) bought houses for $500 a piece and started renting them, now they are worth a TON more (probably a range from $40,000 to $200,000 a piece) and she reputedly owns 300 homes in the city. They were HIGH RISK investments when they bought them but now she owns a real estate empire. Yeah she probably had to put up with some serious shit, but she made a fortune, she knew the neighborhood would become popular again some day and made out like a bandit. Rustic and HG, good analysis on the math side. For many people, buying a home is emotional not just an investment. If you don't think about where you'll be happy to live then you may end up hating your investment which really sucks because getting out of a house ain't easy. | ||
Ray1936 Member Username: Ray1936 Post Number: 393 Registered: 01-2005 Posted From: 207.200.116.139 |
This thread started out with a depressing title, and turned into a good, thoughtful discussion. HB is quite right; maintenance and improvements into the various homes were not quoted into the dollar figures, and they were substantial over the years -- despite being a dedicated "do-it-yourselfer". So, yes, don't buy a house if you expect it to make you rich. If it happens to do that, it's pure serendipity. This home we're having built will be our final home, and thanks to reasonable profits on past homes, we'll not have a mortgage to worry about. That's comforting to this old fart. | ||
Neilr Member Username: Neilr Post Number: 222 Registered: 06-2005 Posted From: 69.242.215.65 |
As an aside to this thread, let me recommend a beautifully done picture book by Douglas Keister entitled Going Out in Style: the Architecture of Eternity. The book pictures and discusses many of America's most beautiful private mausoleums and crypts. | ||
Ray1936 Member Username: Ray1936 Post Number: 394 Registered: 01-2005 Posted From: 207.200.116.139 |
They are interesting, Neilr, especially the ones in Woodlawn or Elmwood. But it's ashes to ashes for me. | ||
Huggybear Member Username: Huggybear Post Number: 186 Registered: 08-2005 Posted From: 64.148.231.89 |
Ray, everyone knows the real reason to buy a house is to have fun changing it to fit your own taste and bitterly complaining about what the previous "hun" owner did to it - that's why I bought one! The entertainment is worth the price of admisison. Rent is a good point - I think that at some point, though, rent closely tracks the cost of home ownership, the difference being the landlord's return on investment. In a somewhat soft market like the Detroit area, the ROI might be pretty low. But more seriously, home ownership is sold to a lot of lower-income people whom it does not (and cannot) benefit from it. Cash-strapped people are told "don't throw your money away paying a landlord," but what difference does it make if you make zero with a landlord or buy a house that does not depreciate? | ||
Ray1936 Member Username: Ray1936 Post Number: 397 Registered: 01-2005 Posted From: 207.200.116.139 |
Yeah, HB. In my first post on this thread I mentioned, along with my various houses, that each one holds a gold mine of happy memories, and that's worth more than any dollar value. I dabbled once in being a landlord. Bought a house on Burt Road for a rental. The first tenant I had trashed the place. After I got 'em booted out of there, I busted my rear fixing it back up, then sold it for what I paid for it. That was enuf for me. |
