Friday, March 16, 2012

Detroit Real Estate - What $465,000 (or less) Will Buy You

Updated September 2013

Way back in August 2010, I posted an article entitled "The $5000 House - Fact or Fiction", a posting that looked at what was classified as the least expensive real estate in the United States.   I would like to revisit Detroit's real estate market but this time, I have selected a couple of houses that are rather amazing, even though they are priced between $400,000 and $500,000.

First, let's take a brief look at housing affordability in Detroit.  According to the 2013 Demographia International Housing Affordability Survey, Detroit, Michigan has America's most affordable housing market when median house price is measured in terms of median household income.  In the third quarter of 2012, the median price for a home in Detroit was $75,700 and the median household income was $49,800.  When you divide the median price for a home by the median household income, the result is the median multiplier which, in Detroit's case, works out to 1.5.  Demographia defines any real estate market with a median multiple of less than 3.0 as "affordable" so you can see that Detroit is a very affordable market.  This is largely because of the exodus of white homeowners from the inner city to the suburbs during the 1960s and 1970s.  This has resulted in a huge overhang of vacant homes in some parts of Detroit; to alleviate this problem, Detroit city officials plan to demolish city blocks of homes to clean up  neighbourhoods.  All of this has impacted housing prices right up the "food chain".

Now, let's take a look at the two homes in question.

Here's the first one located at 700 West Boston Boulevard:


This 9638 square foot English manor-style mansion (known as Stone Hedge) was built in 1914 for Walter Owen Briggs Sr.  It is located on 1.41 acres in the historically significant Boston-Edison neighbourhood near the centre of Detroit.  Notable residents of the area included Henry Ford, Sebastian S. Kresge (founder of the S.S. Kresge Company) and Detroit Tigers player Ty Cobb.  Walter Briggs founded Briggs Manufacturing in 1908, the world's largest independent producer of car bodies which later diversified into the manufacturing of plumbing fixtures.  Mr. Briggs was owner of the Detroit Tigers and completed a major renovation to Tiger Stadium.

Back to the house.  There are 6 full bathrooms and one partial bathroom, 9 fireplaces and an elevator.  Here are three interior photos showing just how lavish the wood panelled walls are:




There is also a carriage house included for those nosy guests that will be dropping by for an overnight visit.  As well, there is a good selection of schools nearby, with four public and one private school within a mile of your new home, just in case you care.  In the interest of full disclosure, 2011 property taxes were a very reasonable $4,784.  Oh yes, and the asking price?  A very modest $465,000.

On to the second home.  If $465,000 is a bit rich for your blood, here's another mansion listed at $429,000 located at 1771 Seminole Street in central Detroit, about 8 miles from the first home:


This 8 bedroom, 6 bathroom two story (actually three stories but the third floor is not refurbished) 11,027 square foot home was built in 1904 and is located on a 1.09 acre lot in the historic and rather exclusive Indian Village neighbourhood, another neighbourhood listed in the National Register of Historic Places.  Prominent residents have included Edsel Ford among others.

Here are two interior shots:



Here is a photo of the carriage house which actually appears to be larger than many homes!


Property taxes on this home are a tad higher than they are on the first home in this posting; the owners paid $12,324 in 2008 but as the assessment dropped from $206,313 to $142,109 in 2011, the taxes dropped to $9,446.

As a bonus for my readers, just in case neither of these places is to your liking, here's one that might be:


This three bedroom, one bathroom 1500 square foot colonial style brick home built in 1938 can be yours for, wait for it, $100.  All it needs is a bit of tender loving care...and some windows.

7 comments:

  1. Astounding. And by the way, as someone living in Tokyo, I just now stumbled upon your blog through your post on Japan's quakes. Thanks for the perspective.

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    1. Thanks Michael. I spent some time in Japan a couple of years ago - what an amazing nation. Seeing Shibuya in person was like an out-of-body experience.

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  2. Many investors recognize the financial cycle and see Detroit as best chance to begin using real estate as long period investment autos that offer steady high profits.

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  3. And to think I paid around $90 grand for a 750 sq. foot house...

    Too bad Detroit is such a pit...

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  4. In Honolulu, that $100 colonial fixer upper would easily go for $500,000.

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