Less than zero: Lots of Detroit properties worth even less than $1 asking price

By Jennie L. Phipps Posted 3:00PM 08/14/08 Real Estate, Family Money

You might blame the fact that houses in Detroit's drug war-torn neighborhoods are going for $1 (plus closing costs and thousands in back taxes) on the foreclosure crisis, but the reality is grimmer and probably more permanent.

Although the Detroit News featured the $1 sales on its front page, these kinds of giveaways have been common in East Coast cities for the last 30 or 40 years as a way to unload property with no market value in their current condition.

I took one of them 30 years ago from the city of Wilmington, Del., in return for agreeing to fix it up and live in it for three years. My oldest son's first word was "Ralph," the name of the plumbing and heating contractor who spent more time than his father at our perpetually under-construction home.

But at the end of those three years worth of dust and sweat, we sold the place and cleared $25,000.

I doubt that a property giveaway in Detroit would have such a happy ending these days.
I wrote a story six years ago for the online magazine of the National Trust for Historic Preservation on a neighborhood near the one featured in the Detroit News. Houses in both areas are similar -- a basically attractive mix of early 20th-century homes, including Dutch colonials, Tudor revivals, and Arts and Crafts bungalows. At the time, rapper Eminem wanted to burn down a few of them for his movie, "8 Mile." Nobody protested much because nobody cared.

Real Estate Troubles

WASHINGTON - JULY 27: (AFP OUT) President George W. Bush arrives at the White House after a bicycle ride July 27, 2008 in Washington, DC. President Bush has said he will sign a mortgage relief bill, allowing homeowners to refinance with government-backed loans rather than foreclosing, that the Senate approved yesterday in a rare Saturday session. (Photo by Dennis Brack-Pool/Getty Images)

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ALTADENA, CA - JULY 25: (FILE PHOTO)A foreclosed home is up for sale July 25, 2008 in Altadena, California. During a weekend session of the Senate congress passed aon July 26, 2008 in Washington, DC. During a weekend session of the Senate congress passed legislation to aid failing mortgage companies Fannie Mae and Freddie Mac that would allow homeowners to escape foreclosure by getting the chance to refinance into more affordable loans backed by the Federal Housing Administration on July 26, 2008 in Washington, DC. The $3.9 billion bill would aid neighborhoods devastated by the housing crisis buy and fix up foreclosed properties, helping an estimated 400,000 homeowners. (Photo by David McNew/Getty Images)

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STOCKTON, CA - APRIL 29: (FILE PHOTO)An abandoned home stands behind a padlocked gate April 29, 2008 in Stockton, California During a weekend session of the Senate congress passed legislation to aid failing mortgage companies Fannie Mae and Freddie Mac that would allow homeowners to escape foreclosure by getting the chance to refinance into more affordable loans backed by the Federal Housing Administration on July 26, 2008 in Washington, DC. The $3.9 billion bill would aid neighborhoods devastated by the housing crisis buy and fix up foreclosed properties, helping an estimated 400,000 homeowners.(Photo by Justin Sullivan/Getty Images)

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STOCKTON, CA - APRIL 29: (FILE PHOTO) A foreclosure sign sits in front of a home for sale April 29, 2008 in Stockton, California. During a weekend session of the Senate congress passed legislation to aid failing mortgage companies Fannie Mae and Freddie Mac that would allow homeowners to escape foreclosure by getting the chance to refinance into more affordable loans backed by the Federal Housing Administration on July 26, 2008 in Washington, DC. The $3.9 billion bill would aid neighborhoods devastated by the housing crisis buy and fix up foreclosed properties, helping an estimated 400,000 homeowners. (Photo by Justin Sullivan/Getty Images)

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A worker installs air conditioners at a new office building construction site in Jakarta July 23, 2008. While global investors shirk at anything property-related after the U.S. subprime mortgage meltdown, Indonesian developers are possibly Asia's best kept secret, because brisk home sales contradict share prices that reflect a market crash. Picture taken July 23, 2008. REUTERS/Beawiharta (INDONESIA)

Reuters

Labourers work at an apartment construction site in Jakarta July 21, 2008. While global investors shirk at anything property-related after the U.S. subprime mortgage meltdown, Indonesian developers are possibly Asia's best kept secret, because brisk home sales contradict share prices that reflect a market crash. Picture taken July 21, 2008...REUTERS/Crack Palinggi (INDONESIA)

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A labourer drills holes at an apartment construction site in Jakarta July 21, 2008. While global investors shirk at anything property-related after the U.S. subprime mortgage meltdown, Indonesian developers are possibly Asia's best kept secret, because brisk home sales contradict share prices that reflect a market crash. Picture taken July 21, 2008...REUTERS/Crack Palinggi (INDONESIA)

Reuters

A labourer works at an apartment construction site in Jakarta July 21, 2008. While global investors shirk at anything property-related after the U.S. subprime mortgage meltdown, Indonesian developers are possibly Asia's best kept secret, because brisk home sales contradict share prices that reflect a market crash. Picture taken July 21, 2008...REUTERS/Crack Palinggi (INDONESIA)

Reuters

A palm tree is reflected on Countrywide Bank Home Loans branch window in La Canada Flintridge, Calif. on Thursday, July 24, 2008. A federal grand jury is investigating mortgage lenders Countrywide Financial Corp., New Century Financial Corp. and IndyMac Bancorp Inc., a person familiar with the situation told The Associated Press on Thursday. (AP Photo/Damian Dovarganes)

Since then unemployment and foreclosures have made things worse. Over the last 40 years, Detroit has gone from having the highest rate of home ownership in the country to having the highest rate of home foreclosures. The unemployment rate is at least 10% and the high-school graduation rate is less than 20% Mayor Kwame M. Kilpatrick is facing felony charges for lying about a variety of his sins and was in jail last week.

Not the sort of city likely to attract even the most committed urban pioneers.

They filmed "RoboCop" in Detroit 10 years after the racial riots destroyed big sections of the city in the 1960s. No set designers were required.

Earlier in this decade, it seemed like things were improving. But the decline in auto industry-related jobs have hit city residents hardest. These days, copper pipes are worth more than the foreclosed and abandoned properties.