August 31, 2007
Great House Prices
Investment Property" pictured above, which is listed at a $1,500 sales
price (negotiable?) with estimated monthly payments of only "$7 per
"$7 for a monthly house payment," isn't that about what a single pack of cigarettes cost now?
Well, yes, but it's in Detroit.
TrackBack URL for this entry:
Listed below are links to weblogs that reference Great House Prices:
This might be a "great investment property" - in Orange County. But it's in Detroit, whose shrinking population, awesomely-bad public schools, risibly-confiscatory taxes, Third-World infrastructure, appalling crime and serially-corrupt city government, has succeeded in doing what no civilized nation before it has succeeded in doing - making real property worthless.
You'll note that the instant property has not sold, even at that price, indicating that it's not worth even the laughable amount asked for it. Large areas of Detroit are filled with such properties, abandoned and slowly reverting back to nature. Anyone who can afford this home, doesn't want to live where it is, and anyone who wants to live where it is, can't afford it and doesn't need to - the streets are filled with homes like this, simply move into one. The nominal owner, if there is one, doesn't care, and if it has reverted to the city for unpaid property taxes, your chances of being found and evicted from it are zero.
Posted by: llamas | Aug 31, 2007 12:22:40 PM
"and if it has reverted to the city for unpaid property taxes"
I'd love to know what the property taxes are on a $1500 property in Detroit. Let me guess: more than $1500 a year?
Tim adds: Fascinating question....yes, I'd guess that assessed value is not sales value.
Update: amazingly, having looked it up, taxable value is half market value. You then pay 67 mills (6.7%) of that per year. $50 a year perhaps?
Posted by: Kay Tie | Aug 31, 2007 12:25:48 PM
Yes, MI assessed value (think 'rateable value', if you're old enough) is supposed to be 50% of market value. But it's essentially impossible to arrive at a meaningful market value for a large number of homes in Detroit, since they seldom sell, and can barely be given away. Since you can't write a contract for less than a dollar, homes in Detroit sometimes change hands for a dollar.
Detroit property taxes are significantly higher than 67 mills, I believe.
Even so, it's rather academic - if the owner doesn't pay his property taxes, who cares how much they are? The City of Detroit has such a long and storied history of unbelievable incompetence and corruption when it comes to assessing and collecting property taxes that property tax in some areas of Detroit is now what you might call an academic issue - something the people have to look up on Wikipedia to understand, never having seen a functional property-tax system in action for themselves.
The property taxes are one reason that this home and other like it won't sell. Say that someone pays the asking price of $1500 for it - even at that price, this home is not in Harmonie Park or Indian Village. But - as soon as the sale closes, the City is free to reassess the SEV, and they are not Headlee-limited either, so they'll assess this home at a market value of $128,000, SEV of $64,000, and they'll send the new owner a property tax bill for $3600 pa. Please.
So now you have a property tax liability more than twice the market value of the house - even if you accept that the property was worth $1500 to begin with. The Navgator-navigators at City hall can claim an increase in the city's tax base and use the notional added income to prepare ever-more-grandiose budgets and promise ever-more-lavish spending.
Not a dime of these property taxes will ever be collected, of course - it's a shell-game.
Just out of interest, one might identify this home and find out what the City claims that its SEV is today. A large drink says that it is listed at $25,000 or more.
Posted by: llamas | Aug 31, 2007 2:09:20 PM