Detroit Real Estate: Down and Out at Market Value
Oct 26th, 2009 | By Gary Gibson | Category: Featured, Morning Whiskey
Detroit must be feeling like a streetwalker far past her prime.
Some 9,000 homes and lots went up for tax foreclosure auction in the American symbol of industrial urban failure…yet 80% of them remain unsold despite a minimum bid of $500.
How the world turns.
Once Detroit was a dynamic city, the urban equivalent perhaps of a can-do, modern woman, the kind who could have easily attracted money and devotion from deep-pocketed suitors.
But now the ol’ gal just ain’t what she used to be. “Motor City” must sting like an accusation. Her industries are gone and the political props have only prevented the sort of changes that she needed to retain her vitality.
Now she’s lost her looks…and her dignity…and the only ones willing to touch her aren’t willing to pay very much. But apparently a few banks are hoping to buy claims to pimp Detroit out, while making absolutely no investment in improving her lot.
“Critics say the poor showing at the auction underscores the limits of using a market-based system to clean up property tax problems.”
No kidding!
Critics are always blaming a market-based system…even when it was politics fighting the market that made things so bad in the first place. And God forbid that the market tries to clean things up.
There are plenty of people who would love to buy Motor City’s properties cheap and actually move into the city…but the banks keep outbidding them for the decent properties.
The banks, of course, are hoping to make a quick profit…but property prices improve only when the right kind of productive, mindful people move in and form strong local economies.
By buying up the properties, banks are pricing out precisely the kind of people who would make their investments pay off!
I suspect the banks believe that they can simply count on the government kicking off another real estate bubble with the old bag of tricks: by manipulating interest rates and the cost of money and debt. And who can blame them?
We’ve all been conditioned to believe that politics will trump markets forever, that the universe runs on votes instead of physics. Things will–predictably–get worse until this belief is temporarily wrung out of our collective consciousness.
In the meantime, consider homesteading in Detroit. In a little while, the banks will have lost their taste for speculation…along with another chunk of taxpayer money.
Living in Detroit would be rough at first, like living on the frontier full of hostile natives: Mad Max meets the Ol’ West. And it may not pay off. Cities do die occasionally, you know.
But that’s what smart investment is all about. The gains are puny when the chances of success are high. If risk has its rewards, then Detroit’s abandoned streets may be hiding gold under the grit.
Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder
October 26, 2009
Gary Gibson
Gary Gibson is the managing editor for Whiskey & Gunpowder. He joins the Whiskey staff as a long-time fan and reader of both Whiskey & Gunpowder and the Daily Reckoning. A graduate of Fordham University, Gary now spends his days reading about and writing on limited government, sound money, personal responsibility and resource investing.
ShareThis
Sad smile…those without private incomes go where the jobs are. MDC and I learned yesterday that one of our favorite stores (a delightful discount place that carries gourmet food items, office supplies, and odd lots of one never knows what) is closing. The manager and her husband are thrilled because they have been offered positions if they move hundreds of miles away to Dennison (near the OK border) where the store will be re-opened, from Stephensville, population 15,000+. A job is so precious with 1/6th of those who want to work and have any skills unemployed that they will uproot their lives and bear the cost of the move just to keep their paychecks. America is close to the Grapes of Wrath thing, heading off to where there are even rumors of jobs.
We spent three marvelous days with Tex Norton at his lakehouse. To be precise, we spent three days at a magnificent bed and breakfast next door, since Tex is in the midst of remodeling two bedrooms himself in his beautiful place. The lake folk had a thriving tourism business…until the Colorado River Authority confiscated 30 feet of water from the 23,000 acre lake. Tex’s dock and the B&B’s dock are stranded inland, now, surrounded by grass, when normally the water comes up to Virginny & John’s enormous deck. There is only one private boat-launching ramp that is still functioning. The Vanishing Texas Rivers Cruises cannot run, the fishing guides are out of work, and hotel, motel, and B&B rooms are all but empty. The local grocery store and the beer, bait, and ammo shops are dying. Costs go on, but there is not enough trade to meet them.
Tourism would have been down due to the general economic situation, but what is killing the beautiful resort and ranching area is government intervention and bare-faced “legitimised” theft. The politicos in Austin, the state capitol, took the water to cater to voters and special interests there.
Water “rights” are becoming more and more of an issue, as folks in southern California found again earlier this year when the water needed to irrigate their crops was flushed away uselessly for the sake of some obscure critter. The crops died, produce prices went up, and the wretched whatever it was did not benefit. California has become increasingly desperate for hydroelectric power because the water is wasted in the name of the sacred salmon–who are harmed by attempts to “help” them spawn. This, in turn, lead to CA buying power from WA, which raised the price dramatically fo WA residents.
A bill before Congress intends to claim ALL water, from any source, as the property of the Federal Government. Already it is a CRIME to “harvest” rainwater which lands on private roofs in some areas. I am quite serious: it is a CRIME to catch water in barrels from drain spouts. The jackbooted thugs will come and kick in your rain barrel, spilling the water on the ground, and fine you to boot.
That is certainly absurd, but it portends even more serious problems. The two things which business (and, hence, individuals) must have to plan for the future and make it worthwhile to invest time, effort, and money are a stable system of law and water. Who would have built a resort had he known the government could destroy the lake? No one of any sense.
What will we do on the ranch when Washington claims that the water in the lakes we made by damming enormous gullies (at vast expense) belongs to IT? Our livestock and local wildlife drinks out of those lakes, and fish thrive in them and have for over sixty years. The Feds propose to claim title to the water rights which throughout history have been conveyed with property or sold separately, bare-faced theft from land owners. Doubtless the offensive myrmidons of the law will insist that they have the “right” to inspect our private wells, demand that we chlorinate them (poisoning a well is a DREADFUL thing to do, and I am allergic to chlorine), and charge me for the water which comes out of the well we paid for pumped by electricity we pay for, as well. In time will they limit the usage? Cities do, and/or charge enormous additional amounts for using more than the average in the neighborhood. “Civilization” is encroaching upon the ranch, having pushed smack up against our North and East borders. Our “ration” would be consumed by household use…leaving cattle, goats, pigs, dogs, chickens, horses, deer, gardens, and greenhouses which would still require large amounts of water. The problem is…government doesn’t CARE what it takes to run a business other than in terms of taxes and control.
Taxes, unions, and government intervention killed Detroit. The water grab and the Food “Safety” Act will destroy the remaining small farms and ranches–and that leaves you city folks at the nonexistent mercy of Agribiz, Monsanto, and rapacious tax lords. It is not really a joke that some day soon we will be growing carrots in closets under grow lights, hiding gardens as the growers of marijuana do their crops now. It is all about control and deliberate destruction of wealth. Precisely where in the Constitution does it say that the government can confiscate our natural resources on “private” property? Unfortunately, my land is their land. So long as we must pay Danegeld for it yearly we do not really “own” houses or land–and as Washington proved vividly 154 years ago, taxes can be raised to the point where it is impossible to pay them.
Short term I suppose an excellent investment is desalination plants. That will last only as long as it takes the Greens to have the seas declared the property of the UN to be preserved for marine life. Where does the madness stop? Presumably at the future Ayn Rand foresaw: when a few of the warlords and the new “nobility” live in ostentatious luxury, and the rest of us are dead or huddled in huts along the Ganges, the Mississippi, and the Colorado.
For many reasons every household should own a good portable water filtration system (I bought the Berkey, myself, the best I could find. As always, I have NO commercial interest there.), and stocked up on sodium chlorite (with a “T”, not a “D;” not table salt, in other words) which will render even pond and ditch water safe to drink…if you can manage to pilfer some in a world where ALL water “belongs” to the Feds. It does not require much knowledge of politics to see that “promoting the general welfare” will mean taking the water from red areas for the benefit of the blues.
Equal treatment under the law is a myth that disappeared long, long ago.
Linda Brady Traynham.
[...] This post was mentioned on Twitter by Whiskey Gunpowder, Gary Gibson. Gary Gibson said: Detroit Real Estate: Down and Out at Market Value: Detroit must be feeling like a streetwalker far past her pri.. http://bit.ly/2cCF8W [...]
Social comments and analytics for this post…
This post was mentioned on Twitter by GaryGibsonAgora: Detroit Real Estate: Down and Out at Market Value: Detroit must be feeling like a streetwalker far past her pri.. http://bit.ly/2cCF8W...
Twitter is a poor excuse for real comments.
Great post Mrs. Traynham. You did miss one nuance however. The carrots will be illegal, the MJ won’t!
Gary, good article, but anyone who actually buys a house to live in, in Detroit is literally playing with fire. You’d have to turn it into a fortress, the place is that dangerous. I was born there and grew up in the area. I could go on about forever, but won’t, other than to say I can still remember the plumes of smoke during the summer of 1967.