Homes go for £800 - could it happen here?

carolt

http://www.guardian.co.uk/business/2008/sep/26/useconomy.usa


Homes go for £800 as tide of foreclosures ends American dream for millions

• Housing crisis hits poor and well-off states alike
• Over 300,000 properties faced seizure last month


It doesn't cost much to snap up a house these days in the down-at-heel motor city of Detroit. Agents advertise two-bedroom properties for as little as $1,500 (£800). "It's a phenomenon that's unreal that's going on at the moment," said Lolita Haley, owner of Prime Financial Plus Realty in suburban Detroit. "Foreclosed homes are constantly coming on to the market."

In cities throughout America's heartland, the crisis-stricken housing market is worsening by the day as struggling families abandon property because they are unable to keep up mortgage payments.

Some 6.41% of US home loans are in arrears - the highest figure since records began in 1979 - according to the Mortgage Bankers Association. More than 2 million Americans lost their homes to foreclosure last year and the figure is set to be far higher in 2008. Last month alone, repossession papers were filed on 303,879 properties.

As politicians in Congress thrashed out the details of the Bush administration's $700bn bailout plan for the banking industry, homeowners protested outside congressional offices yesterday.

The Neighbourhood Assistance Corporation of America, which helps people to negotiate with lenders, has derided the rescue package as the "leave no banker behind" plan, and is demanding a moratorium on repossessions.

...The worst-hit regions in the crisis fall into two categories. There are states that were already economically deprived, such as Mississippi, Michigan and Ohio, where job losses have made it tough for people to keep up mortgage repayments. Then there are relatively well-off areas in Florida, Nevada and California where a particularly aggressive housing boom collapsed catastrophically, leaving millions of people with mortgages far higher than the value of their homes.

Max_Headroom_3

No. In a word.

They've got a bottom level price as investment properties way way above that figure.

GDB2222

"leave no banker behind" Got to love it.

carolt

Max_Headroom wrote: »

No. In a word.

They've got a bottom level price as investment properties way way above that figure.

In London, say, yes. But in more distressed parts of the country, no.

Houses sold for a few thousand in undesirable northern towns a decade ago - why not again?

Generali

Max_Headroom wrote: »

No. In a word.

They've got a bottom level price as investment properties way way above that figure.

Why not? Houses used to sell for a few hundred quid on bad estates in run down Northern towns a few years back. If you think prices can't go back to where they were, ask yourself what has changed?

To my mind 2 things changed to increase the value of these 'valueless' houses - investors buying up houses because 'they look cheap compared to where I live' and the Government spending money on doing up run down areas.

Investors aren't investing and the Government is going to run out of money in a couple of years the way things are going so what's going to prop up prices then?

mewbie_2

Max_Headroom wrote: »

No. In a word.

They've got a bottom level price as investment properties way way above that figure.

Not so sure. New build flats in some areas mostly empty. Can't sell. Can't rent out. Estate can't afford basic maintenance - lifts, etc. What's it worth?

dopester

For landlords and their investment properties, don't be expecting HM Gov to kick up lots in housing benefit if house prices continue to crash hard, especially with millions of newly unemployed.

Even now, they are looking at ways of cutting back lots of expenditure, and finding ways to claw more in.

I expect rents in many areas to fall drastically for your investment properties.

Generali

dopester wrote: »

For landlords and their investment properties, don't be expecting HM Gov to kick up lots in housing benefit if house prices continue to crash hard, especially with millions of newly unemployed.

Even now, they are looking at ways of cutting back lots of expenditure, and finding ways to claw more in.

I expect rents in many areas to fall drastically for your investment properties.

There is quite a significant cost to owning lots of modern flats - in some cases the service charges are horrendous! In the Barbican you pay a couple of grand a year but in a low rise, for 2 years out of 20 you pay £20k as it needs a new lift! Lots of modern places with pools, gyms, gardens etc cost easily as much.

If/when unemployment starts to rise, the Govt will be pretty anxious to cut welfare costs as the budget deficit is already so bad and rapidly getting worse. Housing benefit has to be a prime target as it's so easy to cut without harming the kiddies or the 'most vunnerble[sic] in so-si-tee"

robpw2

anyone got 800 so i can buy a house in detroit

PasturesNew

My friend sold her house in Manchester about 4 years ago for the going rate of £12,000.

I remember houses on bad estates in Corby in the late 70s going for £1000.

But, no, it's different here to the States. Over there houses are a LOT cheaper anyway in general, so to get sold they're competing with silly low prices to start with.

I have a friend in the States who has just viewed a 4-bed detached, with land, at £50k.

imho, I wouldn't ever think property would sell ever for less than, say, it's 2000 price. That would be in an Armageddon scenario.

They're worth more than £1000 if you take them apart and flog off the bricks (assuming all copper had already been raided and the interior burnt out - as that's the sort of house that would be cheapest)

PasturesNew

Just speaking to a mate in the US about these.
He says over there to get a repossessed property it's harder than here. You have to go to court. That means there's an even more limited marketplace to sell them to as your average man on the street will be afraid of that system.