You might wonder if there's an easy way to identify a really bad real estate market. Detroit can help. How about when you can't auction houses off with a starting bid of $500? Yep, that's pretty bad. We all know that things are truly awful in Detroit, but this answers the question: just how bad?
In a report that can really only be described as scary, Reuters says:
Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.
So that's not one or two properties not selling for $500. That's over 80%. Maybe this shouldn't be surprising, since back in January there was a report that the median home price in Detroit was $7,500. This might just indicate it's fallen a bit... further. Here's some more detail from the article:
After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag.
"OK," he said. "We only have 300 more pages to go."
There was tired laughter from investors ready to roll the dice on a city that has become a symbol of the collapse of the U.S. auto industry, pressures on the industrial middle-class and intractable problems for the urban poor.
On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters.
Poor Detroit. Things there are just terrible. I'm sure no one needs to be reminded of the condition that the Big 3 automakers are in. They call Detroit their home and have laid off thousands. Consequently, lots of their suppliers, many of which are also located in or around the city, have suffered as well.
That's part of the reason Michigan has the highest unemployment rate of any other U.S. state. As of September, according to the Bureau of Labor Statistics its unemployment rate was 15.3%. The next highest state was Nevada at 13.3%. Michigan's rate was more than 56% higher than the disastrous national rate of 9.8%!