Archive for the 'Michigan Articles' Category

Detroit continues to stand strong despite the waves of residential and commercial real estate foreclosures that hit the city. While a number of commercial investors delayed or cancelled their planned business endeavors, several have shown their confidence in the eventual recovery and rise of Detroit to its former position in the business world.

Among business enterprises continuing their expansion, construction or acquisition plans in metro Detroit are Wal-Mart, Livonia Phoenix, the partnership of ING Clarion and Ramco-Gershenson Properties, the University of Michigan Credit Union, Doeren Mayhew and Magna International.

All these have decided to pursue their growth plans despite the reality of record numbers of repossession homes in Detroit. In April, more than 4,100 units were acquired back by banks, a staggering 98 percent spike from the April total last year. This number was a substantial addition to the already record high numbers of bank owned homes already on the market and those not yet released by lenders.

Similarly, Michigan repossession homes rose by 9.4 percent to 6,252 units in April from 5,715 in March. In the first 4 months of the year, a total of 24,856 units became repossession houses for sale.

Despite these residential and commercial real estate foreclosures in high numbers, a number of investors still believe in the viability and profitability of ventures in metro Detroit.

Wal-Mart SuperCenter will anchor the Livonia Marketplace shopping center being built by Livonia and its partners. The UM Credit Union will buy the former headquarters of the Ann Arbor News while accounting firm Doeren Mayhew will purchase one of the buildings in the Columbia Center. Meanwhile, Canadian firm Magna International will lease the space formerly occupied by General Motors in the Troy Technology Park.

Among the great success stories in the midst of commercial real estate foreclosures in metro Detroit is the rise of the Shops of Old Orchard from 40-percent to 90-percent occupancy, and the credit goes to Ramco-Gershenson and ING Clarion.

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Sales of repossession homes in Grand Rapids, Michigan slowed slightly in October, but foreclosure sales and short sales are expected to rise again over the next weeks and months because of the increase in foreclosure filings in the metro area.

As reported by a foreclosure tracking firm, the number of foreclosure filings in Grand Rapids in the July to September quarter rose by nearly 9 percent from the previous quarter and by more than 25 percent compared to filings during the same period last year.

A total of 2,415 residential units in Grand Rapids received default or foreclosure notices, representing one out of every 132 households in default or foreclosure.

Meanwhile, total house sales in the metro area in October soared by 35 percent compared to total sales in October last year, with the average sales price increasing by more than three percent from the same month last year to $109,826.

According to officers of the Grand Rapids Association of Realtors, the growth in home sales occurred despite more than 9 percent of decrease in filings from October last year. They also contended that the increase in the average sales price happened because of the drop in short sales and in sales of lower-priced repossession homes in September.

In September, the average sales price dropped by more than 15 percent to $104,327, compared to the average sales price in the first three quarters of 2008.

According to Julie Rietberg, chief executive of the realtor association, the most active area of the market continues to be in single-family houses in the price range of $100,000 to $140,000. She added that whereas before home sales typically drop in the fall, home sales this September continued to rise because of the large number of first time buyers who took advantage of the federal tax credit.

There are a lot of advocates calling for the extension of the $8,000 federal tax credit because of the significant role it played in home sales increases and in home ownership programs for lower-income families throughout the country.

But there are also real estate professionals who have mixed feelings about the extension of the tax credit program. Grand Rapids lender Tom Vanderwell said he personally supports the extension of the program to help cut down the number of repossession homes, but he added that the policy is not good for the overall economy if it is extended indefinitely.

Cheap repo homes are in abundance in Detroit for investors who have cash. Because of the extremely low price levels of houses for sale in some parts of the city, sellers have been favoring cash bids.

Besides, banks have been rejecting loan applications with amounts lower than $35,000. Having been burned by speculators in the past, banks now are very selective in the kinds of home loans they are providing, tightening the credit environment and making cash-low investors or home buyers unable to buy bargain-priced properties.

According to realtors in Detroit, the image of the city is now changing from its identity as Motown and Red Wings, from its rank as the fifth largest city in the U.S. and from its position as a major U.S. manufacturing hub to an image of bargain-priced foreclosed homes.

Now, the news is full of stories of Detroit homes being sold at $6,900. Realtors in the city talk about getting calls from other countries asking about cheap repo homes.

But in addition to the cash requirement, investors planning to buy bargain houses in Detroit need to be prepared about repair costs. Despite the cheap home prices, opportunities for flipping in the city no longer abound. In comparison to other cities with cheap foreclosures such as Las Vegas, Detroit has a lesser chance of price appreciation in the near future, so flipping is no longer an investment option. The city has dropped sharply from its ranking as fifth largest in the country to eleventh.

The investment strategy of buying, fixing and renting out a home is now what is viable in Detroit’s real estate sector. Buyers need to be prepared to spend at least $15,000 for repairs, in addition to closing costs.

Smart buyers need to bring a contractor with them when inspecting cheap foreclosed properties in Detroit. They need to be able to obtain an accurate assessment of repairs to be done and the total costs of repairs, so they would know the overall amount of money they are going to invest in a certain property.

Out-of-state buyers also need to contact reputable agents and rental managers and talk with nonprofit redevelopment agencies in Detroit so they can avoid investment mistakes that could burn them.

Additionally, prospective investors are also advised to drive around Detroit neighborhoods to look at areas that have positive prospects for redevelopment. Cheap foreclosed homes near hospitals, universities or commercial areas have better prospects for higher rentals.

Government foreclosed homes in Montague City, Michigan were acquired last week by GSMB LLC from the U.S. Department of Agriculture. The two-building apartment properties called Channel View were foreclosed by USDA in 2007, when there were only a few tenants.

Michigan foreclosed properties need special attention from the state because they are contributing to the high ranking of the state in a chart of states based on housing foreclosures, unemployment changes and participation in food stamp programs.

Unemployment benefits would end for about 100,000 people in Detroit and across Michigan in January next year. The schedule is the limit in the period of time that people who are struggling to find jobs could receive unemployment benefits.

The housing market in the Michigan city of Detroit is showing some signs of recovery, according to industry analysts. They noted the marginal decline in property prices, rising home sales and reduced inventories as indications that the housing market is stirring from its deep slumber.

The city of Detroit in Michigan has found another way to address the growing REO property listing in the area. This time, the help comes from artists who heard about the city’s very low home prices.

With 12,564 foreclosure filings in February, Michigan maintained its 6th ranking in RealtyTrac’s chart of foreclosures by state. Michigan was also 6th in foreclosures by state rankings in 2008 and in January

Detroit Mayor Ken Cockrel has proposed to demolish about 2,350 derelict and abandoned homes in blighted neighborhoods using about half of the $47 million provided by the U.S. federal government to tackle its foreclosure problems. An estimated $8 million will be spent to repair certain vacant houses and about $4 million will be used to build new homes.