If homes are so cheap, why are people still renting in Detroit? (Atlanta: real estate, lease)

[tre_maine]

I don't reside in Detroit, but I'm curious to know if home prices are so low, why are people still renting homes instead of purchasing their own?

[animatedmartian]

A few things;

1) Not every home (or areas in Metro Detroit, I should say) is necessarily cheap and affordable to everyone.

2) Renting makes more sense for short-term situations; i.e; schooling, job relocation, etc.

3) Poverty and unemployment levels are still pretty high so even as cheap as housing is, a lot of people are still unable to afford long-term homeownership.

Plus, like any other city, Detroit has other COL factors that balance out against the affordability of housing. For example, transportation is still a big factor given that owning a car is relatively expensive and there's really poor transit here.

[chiroptera]

Most of the very cheap houses you read about require considerable work in order to become liveable. A lot of people can't do the work, or afford to pay for the labor and materials. That $5-10K house can easily cost another double or triple the amount just to be habitable, or up to code.

[zthatzmanz28]

Cost of rehab and EXTREMELY high taxes. It isn't uncommon for many empty houses to come with 2-3 years or more of back taxes and at $2500--$4000 a year, that adds up.

[Retroit]

If the price of used cars is so cheap, why do people lease new cars?

[MichiVegas]

Because Detroit homes are generally a bad investment.

You need a place to live, so you rent. Buying is because you assume values will go up, which in the case of Detroit, has been a foolish bet over the last half-century.

And if you buy you are responsible for taxes, which are outrageous.

[tre_maine]

Thanks for the feedback. I ask because I'm considering purchasing a few cheap properties and renting them out. The cheaper homes I viewed a few months backs were in pretty good shape. Needed only min cosmetics work (heat/ac, paint) I have quite a few relatives that are from Detroit, and they're STILL renting homes/apt. It does makes sense to rent when you're not planning to stay long-term, but for their sake, I would purchase one, little to nothing, and pay the taxes every year.

Detroit seriously needs to lower the property taxes. I would buy plenty if they did. How's the section-8 program with the city?

[tre_maine]

Originally Posted by MichiVegas

Because Detroit homes are generally a bad investment.

You need a place to live, so you rent. Buying is because you assume values will go up, which in the case of Detroit, has been a foolish bet over the last half-century.

And if you buy you are responsible for taxes, which are outrageous.

I'll be in it for the long run. At these prices, the only way is up hopefully. I think it will rebound, but It would take some time. And I'm cool with that.

[MichiVegas]

Originally Posted by tre_maine

I'll be in it for the long run. At these prices, the only way is up hopefully. I think it will rebound, but It would take some time. And I'm cool with that.

Maybe you're right, and they will rebound. I'm just saying, that people have been saying this for 50 years, and property values continue to go down. The city's economic fundamentals continue to deteriorate.

[tre_maine]

Originally Posted by MichiVegas

Maybe you're right, and they will rebound. I'm just saying, that people have been saying this for 50 years, and property values continue to go down. The city's economic fundamentals continue to deteriorate.

Yes it will rebound. Not sure when, but at these prices, I'll put my money in real estate. I'm a real estate investor here in Georgia. Atlanta has seen it's share of bad times. I thought it would take decades to recover. We're still not there, but it's getting better as time progresses. I bought cheap (and I mean cheap) properties in bad neighborhoods. Now, I'm selling them fast!

Instead of paying high taxes on my profits, I rather re-invest in a city that's still at a decline. I'll wait it out. If I can rent and hold them, I'm winning. But I didn't know Detroit's property taxes were that high.

Downtown Detroit is on the come-up, IMO