Example of Detroit Colonial - All bedrooms are upstairs
Example of Detroit Bungalow - Master bedroom downstairs, 2-3 bedrooms upstairs
Example of Detroit Ranch Property - All bedrooms are downstairs
You can thank the sub-prime mortgage foreclosure crisis in the US and the collapse in the auto industry in Detroit from 2004-2010 that resulted in thousands of houses going into foreclosure. (The auto industry has since have revived and hiring in Michigan is at pre-recession levels).
I am amazed daily when I walk into properties in areas that my clients could not even think about buying only 5 years ago.
These houses used to go for $100,000 to $150,000 all day long. You can now buy them for $40,000. For example, one of my clients recently bought a property on Robson Street in the West Side of Detroit. Back in 2007, it sold for $102,000. Suffice to say that is not the price he paid for it recently.
Second the credit markets in USA are still very tight. Banks have started lending to people who want to buy a home to live in, but investor loans and loans to the self-employed are still very tough to get.
So letâ€™s say you want to buy a house for $40,000... Well no bank is doing mortgages for under $65,000. Letâ€™s say you want to buy a house, but are self-employed... Right now no bank is lending to any self-employed person unless you make some serious money and can show tax returns for at least 2 years that prove that income. Plus they will ask for every document one can think of before giving you the mortgage.
The point is that this hot foreclosure market in Detroit is a temporary blip. These low prices will not last. The US real estate recovery is still 5-7 years away, but even today when you have a whole plate of properties available- Buy good properties (3-4 bedrooms with basements, not on main or busy roads) in areas that traditionally have high tenant demand... So you not only can get premium rents today, but if you want to resell these properties in 5-7 years then you will get the equity appreciation that will also come with market recovery.