Who is buying all the expensive homes in Metro Detroit? (Rochester Hills: sales, rent)

[animatedmartian]

Part of the people buying those homes in Metro Detroit could actually be people who simply don't have jobs in Metro Detroit. I'm thinking mostly work from home jobs but I wouldn't know how high that goes up. They could also only have to spend a few months at a job across the country but (usually because of family) they have their primary residence in Metro Detroit.

There's also still a lot of well-educated immigrants moving into Metro Detroit who have accumulated wealth elsewhere though their current incomes may not reflect that.

[belleislerunner]

AM's point is good - one of the ways you create wealth in a region is by selling goods/services to people who live outside the region (i.e. net infusion of cash). Think of cars in Detroit, 401K's for NYC, iphones for California and computers/airplanes for Washington.

Another way is to become as enticing as possible to people who didn't grow up (i.e. earn) their money in the region but then move here and have it to spend. NYC, Miami, Toronto etc also have a lot of this from international sources. That green money then flows through local coffers/businesses. Enticing world class people means we have to act world class. And have world class parks. World class amenities. World class everything.

DBusiness had a piece on that earlier this week.

http://www.dbusiness.com/daily-news/...higan-Economy/

[NOLA101]

Originally Posted by DTWflyer

The big publicly traded companies, the Fortune 500s primarily in automotive OEM, automotive suppliers, banking, and others in Metro Detroit pay good money in management positions but they don't pay sky-high amounts. The vast majority of Manager/Director levels in the fortune 500s top out in the mid-upper 100s. Only a subset make more than $200K, and we are talking about VP and above that do so. Most of these positions are held by people in their 40s, 50s, 60s. These aren't held by 20 & 30 somethings.

There are plenty of intergenerational wealth transfers too. Someone could have a lower salary but inherit wealth.

Originally Posted by DTWflyer

I know many 30 something couples that make combined $200-300k, but they are all buying sub-$500K houses.

That seems unusually conservative, but fine if that's their choice. A 500k home can be easily afforded at half that salary. A 300k household can easily afford a million dollar home.

I will say that I am personally very conservative with my money, make nowhere near 300k, yet my home is worth far more than 500k.

But I doubt most million dollar homes are being purchased by 20 or 30-somethings. It's usually going to be older couples, who have reached peak earning potential and/or want extra space for teenagers or grandkids.

[Coldjensens]

I would guess there are at least 100 homes in Grosse Ile valued at over $1 million. There are a few homes in the tens of millions. Who buys tem?

1. People from other states who sold an average home and came here with the money to discover they can afford a palace.

2. Dual professional households. "Professional" meaning lawyers, jr doctors, medical support, MBAs with mid management positions. Anyone in the $100,000 - $250,000 each range. Some obviously make more than that, but at some point one spouse typically stops working or goes part time to focus on the kids and home management.

3. Business owners (mostly small/mid-sized businesses it seems). Frequently a small business becomes a mid sized business then gets bought out by a big company for $5 - $10 million. Sinking 1 - 2 million of that into a nice home is not unusual.

4. People who had a windfall (left over Dot commers, people who bought a ton of Ford stock in 2008, etc).

5. People who inherited a chunk of money and/or real estate.

6. Doctors, high level engineers, upper management of big companies (many of these people make $600,000 or more a year).

7. Very rarely, people who saved and saved and saved (generally, even if they could afford the fancy house, they could not keep up with the taxes - I know people whose property tax is $35,000 a year and those are not the way high end people.

8. White collar criminals.

9. People who trade up and trade up and trade up - generally people who time their real estate changes well.

10. Not here, but in California, it was somewhat common for people to buy a multi-million home in a large group and then cram it full of people, or take turns living in it. I had a client who owned a small clothing business. Their extended family of about 35 to 40 people took turns living and working in the "factory" where they worked 18 hour days and slept on the floor, and then spending a few months living in the fancy house (not sure whether they worked at all during that time). I think the family matriarch and the "big shots" who managed the company lived in the big house full time. The house had 11 bedrooms and a couple of bonus rooms where whole sub-families shared the room.

[Rothwells mum]

I can give you a profile of the people that live behind us...

Nice Indian family in their late 30's/early 40's with 2 kids (and a set of grandparents living with them).
He works for a fortune 500 hundred company and is a high level executive and I'm not sure if his wife works or not.
They have a manny for their two school age children in the summer.

Purchase price - 900,000

New construction in summer 2015
-approx 3,000 sq ft plus basement 3 story house
Birmingham school district

They moved here from another state and had equity from a house sale.
Most of the people on their street are older (50's-60's) that own the new expensive houses.

[Geo-Aggie]

My God this topic makes me feel poor and ignites feelings of self-loathing. And all this time I thought I was mildly-successful. Heh. Nope, just a half step above the working-poor

[belleislerunner]

Geo - Read the book "Millionaire next door". Not all people who live in 900K homes are actually millionaires.

Many who live in 250K homes are as well. By living in a community much less than your peak potential, you free yourself of the temptation to "keep up with the Jones" - allowing yourself to accumulate wealth/save much more rapidly.

[mgkeith]

^It's true; unfortunately many people living in expensive homes are living above their means. No glamour in being house-poor. I don't understand the need to impress others, but it's just good to feel financially secure and happy with your environment.

[MS313]

Originally Posted by Geo-Aggie

My God this topic makes me feel poor and ignites feelings of self-loathing. And all this time I thought I was mildly-successful. Heh. Nope, just a half step above the working-poor

Lol imagine how I feel... not even making $15 an hour. Damn I need a new job.

[keraT]

Originally Posted by Geo-Aggie

My God this topic makes me feel poor and ignites feelings of self-loathing. And all this time I thought I was mildly-successful. Heh. Nope, just a half step above the working-poor

You are not alone.