According to the Chicago Tribune, Detroit Median Home Sales Price was $7,500! No, I didn’t forget a zero at the end. That’s probably less than what you paid for your car!
So should you rush out and buy a home there?
A house that costs $7500 might make a pretty good investment. Assuming you can rent it out for $250/month, your net return will be in the double digits. But will you really make any money in Detroit?
It’s economy has been slipping for the past 40 years with negative job and population growth. Even the median salary has been dropping for 20 years. The city’s bond rating is at Junk status. The city has “only islands of prosperity amid a dismal landscape”.
Right now, it appears that 1,000 people are leaving the city every month. Mayoral candidate Stanley Christmas recently joked about the 14% drop in homicide rates: “I don’t mean to be sarcastic, but there just isn’t anyone left to kill.”
Every year on halloween people roam the city looking for vacant houses and torch them. So if you are unable to rent out a house in Detroit, there’s a chance it might be used as firewood!
So just beacause real estate is cheap, it doesn’t mean its a good investment! And if you think $7,500 is cheap, check out these real estate deals for under $5,000!