USA tragedy-properties that nobody wants

by vbo Mon May 16th, 2011 at 10:51:56 PM EST

Surfing trough e bay I accidently came to an offer (made for Australians) for 10 apartments (whole building) in USA for just $45,000.

There was a video there on Youtube so I watched it. Sad picture...

There I found house and land offers for as much as $6,000. And nobody wants it. This is a catastrophe of terrific scale. Obviously these are poor neighbourhoods but still in those kinds of neighbourhoods here in Brisbane you can't find anything below &300,000...example here:

What is happening with real estate in Europe? Everywhere?
I know couple who tried to sell small one bedroom apartment in the middle of London for few years and couldn't make a sale.
Here in Australia real estate prises are still standing high and I keep wondering for how long yet. Around my area whatever is "for sale" is sold in a month or so (sold signs everywhere).
How is the real estate, so crucial in western economies, going to play out in the future? Anybody with expertise?

USA tragedy-properties that nobody wants | 35 comments (35 topical, 0 editorial, 0 hidden)

Re: USA tragedy-properties that nobody wants (none / 0)

Same in Spain...

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 17th, 2011 at 02:26:10 AM EST

Re: USA tragedy-properties that nobody wants (none / 0)

[ET Moderation Technology™]

Fixed lazy linking and youtube insertion.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 17th, 2011 at 02:30:39 AM EST

Re: USA tragedy-properties that nobody wants (4.00 / 4)

That property's in Detroit. That's a pretty normal price. There's hit and miss revitalization in the midtown area between downtown and Wayne State. It's a real rough neighborhood. But even in many other smaller cities in the Midwest, it's not strange to see housing that cheap. It is in my hometown.

I have a real hard time seeing prices like those in European cities. There just don't seem to be that many places where the jobs have simply disappeared, and then the people abandoned properties.

That's what drives these extremely low price properties in the US. With the exception of a few old rural houses in Spain and the like I just don't see there being the potential anywhere in Europe for prices to fall that low.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue May 17th, 2011 at 06:27:43 AM EST

Re: USA tragedy-properties that nobody wants (4.00 / 2)

There just don't seem to be that many places where the jobs have simply disappeared, and then the people abandoned properties.

Next time you're in Madrid I'll take you on a tour of plots to be developed that remain undeveloped (they have all the utilities and street lighting, the sidewalks are paved, but no construction ever started on the houses), half-finished apartment buildings, empty subdivisions that were never occupied or sold...

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 17th, 2011 at 06:40:07 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 1)

And then there are small, remote, villages in Italy that are being abandoned because no one wants to live there. The best-known example is probably Riace. where the mayor managed to reverse the trend by actively encouraging refugees to settle there.

by gk (gk (gk quattro due due sette @gmail.com)) on Tue May 17th, 2011 at 06:43:13 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

Was it unthinkable to give housing in Detroit to Katrina refugees some time in 2006-2008? How many of them are still living in FEMA tailers?

by das monde on Wed May 18th, 2011 at 04:34:55 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (4.00 / 2)

That's actually my point.

Next time you're in Madrid I'll take you on a tour of plots to be developed that remain undeveloped (they have all the utilities and street lighting, the sidewalks are paved, but no construction ever started on the houses), half-finished apartment buildings, empty subdivisions that were never occupied or sold.

Show me one place in Madrid where there used to be a thriving neighborhood, with industry and local businesses, that now has abandoned homes, others demolished, and the few holdouts selling for less than you can buy a car for.

What you're talking about is overbuilding. What I'm talking about is a situation where an existing community is in the process of disappearing.

I know that there are a number of places in Europe where there are the same pressures, but (for the moment) there's a social safety net in place, so it's a different beast.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue May 17th, 2011 at 08:53:09 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

Right, okay, I misunderstood.

I'm actually living in one such neighbourhood and we're having a hard time finding an affordable place to buy, so we're renting...

Though there has also been overbuilding on vacant lots within existing "thriving neighbourhoods".

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Tue May 17th, 2011 at 08:56:21 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (4.00 / 3)

I typically think of the crisis in Spain as being more akin to the crises in Nevada, Arizona and Florida -- housing prices go nuts, the market gets oversupplied, the people are up to their eyeballs in debt, and everybody resists taking the hit needed to get back to normal. They're typically thought of as setbacks more than long-term declines.

Detroit is more like what I've heard about northern England -- cities dependent on certain industries, industries decline for a variety of reasons (some natural, some political, etc), and the area falls into a deflationary spiral. They're typically thought of as long-term declines.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue May 17th, 2011 at 09:17:48 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 1)

Yes, that's basically it.

There was never a huge bubble in Detroit or a lot of other cities in the Midwest. It's just a long slow decline. I'm not even sure that Northern England captures it either. In 1970 Detroit had 1.5 million people, now it only has 714,000. The city's population declined by over half.

That sort of absolute collapse hasn't really happened in Northern England. The closest case is Liverpool, and even that's more like a 15-20% decline in population in the same period.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue May 17th, 2011 at 10:32:02 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 1)

True. There were also some factors that helped to cushion the blow there -- immigration, a fair amount of government money being pumped in, a long housing bubble, etc -- that weren't present in Detroit.

But that's why even people who don't live in the US reference Detroit when talking about urban collapse. Most big cities have areas that look Detroit-ish. Even wealthy ones like New York and London. But Detroit is other-worldly in the scale of it.

Even the 1.5m figure understates it a bit. Didn't Detroit peak in 1950 at about 2m?

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue May 17th, 2011 at 10:55:35 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 1)

There a book of pictures taken in Detroit that I find extraordinary:
http://www.marchandmeffre.com/detroit/index.html

by Xavier in Paris on Tue May 17th, 2011 at 02:09:33 PM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (4.00 / 3)

Detroit is ground zero for the failure of US post-WW2 urban policy:

Encouragement of Suburbia: check
White Flight: check
City government run by corporations: check
Failure to maintain public infrastructure: check
Idiotic "re-vitalization" schemes: check
Low population density per acre: check
Elimination of Public Transportation: check
Failure to maintain Public Services: check
Appalling educational system: check

and on & on & so forth.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue May 17th, 2011 at 04:37:46 PM EST
[ Parent ]

Re: USA tragedy (none / 0)

In other words: Every bad thing about a US city you can say in the second half of the 20th Century is present -- and an order of magnitude worse -- in Detroit, without any of the bounce-back other cities have experienced in recent years.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed May 18th, 2011 at 06:07:48 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 1)

O my God! This is so scary! And how people manage to live amongst these ruins? Couldn't they find some use for them? I see a lot of them are in city centre...Unbelievable. They probably do not care any more...you know like when one is so poor and can't afford decent food he starts not to care about anything else around. Really sad and scary...

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Tue May 17th, 2011 at 08:11:33 PM EST
[ Parent ]

Re: Detroit (none / 1)

Those photographs remind me of those by Camilo Jose Vergara. He is one of the great photographers of the recent (post civil rights) changes in cities like Detroit, New York and Camden, NJ with several excellent books to his name. Another place to look is the well-named site the Fabulous Ruins of Detroit.

The first time I was in Detroit, aside from transiting through the airport, I drove in from pleasant little Windsor, Ontario. Coming off the bridge, I felt like I got smacked in the face. There was the abandoned Michigan Central railway station, once the tallest train station in the world, now vacant and gaping, largely devoid of all windows, standing like a head stone over the city that never was and never will be. I was in awe.

by Jace on Sun May 22nd, 2011 at 08:30:54 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (4.00 / 2)

The collapse happened in the towns and villages around the cities - usually the ones that relied on mining. But it was softened by the UK's safety net, which made it possible for some people to stay unemployed for a long time - often with a sideline in the black economy - and not lose their homes.

So prices are lower than the UK average, but there was no crash to rock bottom, and the population outflow was more of a trickle than a panicked or forced exodus.

It was still socially devastating at the time, though.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 17th, 2011 at 11:55:09 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

Also, isn't part of the problem the rather strong decentralisation of public services such as schooling, hospitals, etc... ? Once the Detroit City administration starts bleeding money, all the services become deeply underfunded so that it's a good bet to commute from the next county rather than live there ?

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Tue May 17th, 2011 at 04:35:09 PM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

Normal price? Did they have same prices prior to this crisis?

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Tue May 17th, 2011 at 08:15:02 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 1)

Yes. This isn't something new. In places like Detroit and other parts of the Rust Belt, prices have been like this since the mid 1990s at least. That's as far back as I can personally remember, but I would say that it's been even longer.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue May 17th, 2011 at 08:55:42 AM EST
[ Parent ]

Prior to what crisis? (none / 0)

Detroit doesn't have a crisis in the same way other cities that crashed when the bubble popped have crises. I don't think prices within the city limits -- the $6k figure is for the City of Detroit, not the metro area -- ever got very high even during the "good" years. They recovered a bit in the late-'90s/early-'00s before the Big Three ran into trouble, but there was never an impending crisis driven by housing.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue May 17th, 2011 at 09:01:34 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (4.00 / 2)

Sweden is in my estimation on the high point, about to burst.

The boom appears limited to the larger cities where building new houses is harder (Swedens cities are in general small and widely spread with lots of forest adn parks, on an international scale). In my approximation similar houses goes for around ten times more in Stockholm then in areas where new development is easy and prices are close to the cost of production.

In general Sweden has experienced a long and slow depopulation of the countryside, in particular in northern Sweden, but services are kept up and houses nobody wants to live in are in general tore down in an orderly fashion and the land converted to productice use.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue May 17th, 2011 at 08:16:05 AM EST

Re: USA tragedy-properties that nobody wants (none / 0)

Same thing in France: the property bubble hasn't burst yet, especially in Paris where prices keep going up. But it's only a matter of time.

by Bernard (bernard) on Tue May 17th, 2011 at 04:21:36 PM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

I am afraid same here in Australia...Properties in big cities keep going up, specially Melbourne and Sydney because of job opportunities but even in Brisbane where economy is showing kind of slow down (all tho there are mines in North QLD) prices are at least stable...But those prices are so not realistic comparing to income most of people have that I don't see how they'll stay on a current level...
In a midst of prosperity (5-6 years ago) we had a holiday in a little village Bargara on the coast in central QLD. At some point we thought that once we are pensioners we can sell our house in Brisbane and buy some cheap but nice house in a village like Bargara. We were in shock with prices there. They were same like in Brisbane. Now I checked and it's even worse. Look here:
http://www.realestate.com.au/property-house-qld-bargara-107398726
$510,000 for less than decent home (3bdrm, single garage, pretty old...). I can't believe this. And there is no much of the job opportunities in this small village (tourism only and it's declining even on a Gold Coast).So how this is possible to stay like this is above me...Foreign investors? How many of them can keep those prices up and for how long?

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Tue May 17th, 2011 at 08:29:56 PM EST
[ Parent ]

I have relatives in Western Australia (none / 0)

(doctor with a modest million-dollar house near the beach). The whole state is in a sort of gold rush. They are digging minerals out of the ground and exporting them as fast as they can hire the people to do the work. My brother, a carpenter, is over there at the moment, to pay down his debts in NZ. In the mining towns, renting a two-bedroom flat will cost you $100 000 a year.

So maybe that's why the prices are so high in QLD... you can't build a house for less than that: all the chippies are coining it in WA...

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Wed May 18th, 2011 at 02:48:28 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

I question the sanity of selling a house in a good city to live in a small town. Several friends and relatives have done this, and without fail they have all found it boring. I would be trying to head to the middle of good cities rather than to a place with no service, where you need to drive to buy a litre of milk, where meals on wheels can only deliver once a month.

by njh on Fri May 20th, 2011 at 02:47:46 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

Look at this site:

http://www.foreclosedamericanhomes.com.au/

This is made for Australian investors only...
So Australians are considerate wealthy...or naive?
I have heard of an Australian man (friend of the friend) who is now retired but travels to USA as he has new business there. He is kind of wealthy and he is buying debts of American families there and making money on their misery...What can I say...Australia is just one of USA state in my eyes and people here are mostly as greedy as Americans. When money talks there is no mercy or honesty around...

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Tue May 17th, 2011 at 08:41:48 PM EST

Re: USA tragedy-properties that nobody wants (none / 0)

And look at these homes :
http://www.foreclosedamericanhomes.com.au/properties/

They are decent and are selling for as much as $35,000.Same home has been sold in 2008 for $330,000.
It was a lucky escape for previous owner, haha.
Scary...

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Tue May 17th, 2011 at 08:48:08 PM EST
[ Parent ]

wealthy...or naive? (none / 1)

Wealthy and naive, I think.

If you imagine the US economy is going to bounce back, you could be optimistic about buying, if you chose the property carefully.

If you think--as I do--that the US is in permanent decline, you will have to be very careful indeed to buy into a neighborhood that doesn't just keep collapsing around you.

And there you are--Investing from Australia as an absent landlord: How are you really going to know what you are buying?

The Fates are kind.

by Gaianne on Tue May 17th, 2011 at 10:08:56 PM EST
[ Parent ]

Re: wealthy...or naive? (none / 0)

You wouldn't believe how many Japanese have bought properties here in Australia and they are managed by agencies. But that was during property boom. They are afraid here on Gold Coast of Japanese investors running out because of catastrophe in Japan.
I personally wouldn't buy in USA right now tho. I have no fate in USA economy future at the moment...

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Wed May 18th, 2011 at 12:08:59 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 1)

I just found this:
http://www.moneymorning.com.au/aussie-house-prices-3.php?gclid=CMnGw_Ok8KgCFQrhbgodoENfDA

In this must-read report, Kris Sayce reveals:
* Why the value of your home could fall 61% the minute interest rates start rising... (Beware: the Reserve Bank has 11 chances to hike rates each year!)...
* The truth about the so-called 'housing shortage' underpinning Aussie property prices - and why it never existed...
* How the government secretly raised the cost of your mortgage by 109.9%...
* And the REAL reason why locking all your money into a pile of bricks is not the best way to achieve financial security...
If you're thinking of buying an investment property in Australia in the next 24 months - or even if you just own property - you need to read this report now.
It could be the only honest info you get on Aussie real estate this year.
Basically, there are two schools of thought when it comes to investing in Aussie property.
On one side, you've got a very vocal group of property spruikers - they believe things are pretty much okay and house prices are supported by population growth, low interest rates and a chronic housing shortage.
On the other is a smaller group of housing sceptics - they think Aussie property is in a bubble that's been fuelled by easy credit and stimulus (low interest rates and first-home buyers' incentives) - and as the stimulus gets wound back the bubble will burst, sending property prices tumbling.
So which group should you trust?

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Tue May 17th, 2011 at 08:58:05 PM EST

Re: USA tragedy-properties that nobody wants (none / 0)

Check out Steve Keen's Debtwatch. He had to take a rather long walk last year on account of the government's boosts to residential real estate prices, but I think he is right on the basics, just wrong on the timing.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat May 21st, 2011 at 01:03:10 AM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

Also interesting stuff (prediction)here :
http://www.housingpredictor.com/2011/foreclosures.html

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Tue May 17th, 2011 at 09:13:54 PM EST

Re: USA tragedy-properties that nobody wants (none / 0)

More interesting and scary stuff:
http://www.housingpredictor.com/2011/foreclosure-crisis.html
They predict it will last at least till 2015...

http://www.housingpredictor.com/2011/foreclosures-poll.html

41% think that government should let homeowners get foreclosed.

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Tue May 17th, 2011 at 09:25:29 PM EST
[ Parent ]

Re: USA tragedy-properties that nobody wants (none / 0)

If I was in my 20s or 30s and had the investment money I'd be taking a hard look at moving to Detroit. It's so down in the dumps it's a low risk for getting worse!

In sharp contrast to the "high-flying" coasts, the Southwest, and Texas which have only begun their downward spiral.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed May 18th, 2011 at 05:14:44 PM EST

USA tragedy-properties that nobody wants | 35 comments (35 topical, 0 editorial, 0 hidden)

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USA tragedy-properties that nobody wants

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