Posted by Rich on March 21, 2006 at 18:22:03:
The economics of an area are the MOST important in determining house prices. I have an in-law whose co-worker couldn’t sell properties they have in Detroit because there are no buyers. I don’t know if they’re over priced or not. BUT, you have to ask some questions:
(1) how many new jobs are moving into the area?
(2) how many jobs are being lost due to layoffs,
(3) how intrusive are the gov’t rules on landlords and property owners (this affects your holding costs if you rent it out waiting until the property qualifies for long term cap gains before selling),
(4) what is the tax structure like
Bottom line, a booming area was booming in terms of jobs BEFORE it booms in terms of housing prices. This is Economics 101. More money (good paying jobs) and more demand (more workers) pushes prices up.
I would have thought that the big layoffs from Ford and GM would hit Michigan particularly hard. The new auto plants are all going in to the South (with the right to work laws and lower labor costs).
I expect Detroit to continue its downward slide until a radical change happens in the conditions that invite in or drive away business.