Investors purchased nearly 9/10 Homes in Detroit last year. Reason to worry?

"Eighty-eight percent of the homes sold in Detroit last year were purchased by investors, according to Attom Data Solutions, up from 35 percent in 2010."

Is Detroit just being set up for another crash? The article is concerning as it mentions not only a vastly oversized portion of properties in Detroit being purchased by investors, but also the unusual "flipping" of those rentals. Are these local investors worried about holding the bag when the music stops?

https://www.bloomberg.com/amp/news/a...t-belt-rentals

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Originally Posted by Johnnny5

"Eighty-eight percent of the homes sold in Detroit last year were purchased by investors, according to Attom Data Solutions, up from 35 percent in 2010."

Is Detroit just being set up for another crash? The article is concerning as it mentions not only a vastly oversized portion of properties in Detroit being purchasers by investors, but also the unusual "flipping" of those rentals. Are these local investors worried about holding the bag when the music stops?

https://www.bloomberg.com/amp/news/a...t-belt-rentals

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Naw, those investment companies are too big to fail.

^^^ And some are too FAKE to FINISH what they start! You have alot of these investors 'sitting' on property. Doing nothing.

I'd like to see some entire areas leveled, scraped and rebuilt. Ten to fifteen houses on a block where there used to be thirty; deeper, wider lots. 'Scraped' meaning new underground water and sewer lines, new power, phone, cable lines, some streets eliminated entirely, others rerouted.

Couldn't happen city wide, but parts of Brightmoor would be a good example area.

That number supports what I've seen around the city. I have mixed feelings about it.

On one hand, much of the cities housing stock is in such poor condition that only a person or group with deep pockets could bring it back to functionality. Also, with the number of distressed properties the faster the turn around from abandoned to inhabitable the better.

On the other, prices are going up fast and I question the sustainability. Additionally, quite a few rehabbed homes seem to be sitting empty, presumably owned by people who think there is a lot of room for prices to rise. Not sure that that is true.

Am I correct in thinking that these speculators/investors are not buying homes in the more challenged neighborhoods such as Morningside, Brightmor or Auburndale but are purchasing them in areas where you
could rent a home for $500 per more or more such as LaSalle Gardens, Virginia Park or the Atkinson Avenue Historic District?

The fact that investors are the primary purchases [[smart or smarter money) tells me that there's widespread confidence in the market with upside potential. Retail purchasers [[primary residence for the purpose of shelter) are typically late to the party when new frontiers are forming. This is typical for most investment opportunities. First come the visionary risk takers foreseeing and mopping up opportunity. They provide the spark. This is followed by the more conservative purchasers who have little appetite for risk. Both can work effectively and in sequence for the benefit of all.

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Originally Posted by Zacha341

^^^ And some are too FAKE to FINISH what they start! You have alot of these investors 'sitting' on property. Doing nothing.

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The bigger ones like blackstone mentioned buy in bulk and then cherry pick the good ones and dump the other or let them sit.Blackstone has a 1 billion line of credit with Fannie.

I have an acquaintance that does that also he buys 3 or 4 thousand homes at a time,he never even looks at them,repackages them and sells the packages to wholesalers who cherry pick the flips and dump the rest.

He made enough in two years to buy the Toyota NASCAR team.

It is good and bad though,with credit tight it makes it more expensive for the adverage person to buy a fixer upper for personal use and the little value houses will continue to sit.So in away it prolongs the renter to home owner aspect which long term may do more damage.

But when they hit an erea in bulk it does drive up the values quick.The down side is the market is controlled by them,which is right back to 2004 market manipulation.

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Originally Posted by renf

Am I correct in thinking that these speculators/investors are not buying homes in the more challenged neighborhoods such as Morningside, Brightmor or Auburndale but are purchasing them in areas where you
could rent a home for $500 per more or more such as LaSalle Gardens, Virginia Park or the Atkinson Avenue Historic District?

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I live on Atkinson, there's lots of activity in Virginia Park, North End and, of course, B-E. Investor or otherwise, the safest bet is near the growth and anchors.

But I'm sure there are also some people with more patience or less money buying in neighborhoods like Oakman and Russell Woods that aren't seeing attention yet.

Bottom line, Detroit needs more home owners, not renters, like it use to be. At one time, Detroit had the highest percentage of home owners, than any city in the US. Most of these investors could care less. They're only worried about what goes in their pockets.

More homeowners.
More renters.
More taxpayers.
All good for Detroit

The fact that DuCharme place and Orleans landing are not near sold out at this point shows the market isn't as hot as everyone makes it out to be. Or that $1400 is unreasonable for a 700sqft apartment. This market is overhyped.

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Originally Posted by DeLemur

The fact that DuCharme place and Orleans landing are not near sold out at this point shows the market isn't as hot as everyone makes it out to be. Or that $1400 is unreasonable for a 700sqft apartment. This market is overhyped.

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Or downtown and Midtown is sucking all of the oxygen out of the 'close in' housing market [[or at least at that price point).

If I understand the downtown/Midtown/etc. housing market: Lot of demand but a lot of supply coming on the market too.

If so, some spots will be hot and others cool.

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Originally Posted by Cincinnati_Kid

Bottom line, Detroit needs more home owners, not renters, like it use to be. At one time, Detroit had the highest percentage of home owners, than any city in the US. Most of these investors could care less. They're only worried about what goes in their pockets.

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Out of interest, why is this a bad thing? Investors have more of an incentive to ensure value in the market and in just about every case, they are forward looking. Additionally, what's the situation with other thriving cities? I'd bet their downtowns and immediate adjacent neighborhoods are skewed towards renters for obvious reasons.

As I've mentioned before, investors are those that see opportunity and willing to take risk when no one else will. That's exactly what Detroit needs. If they're not welcome here, then I'm sure they'll find opportunities elsewhere.

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Originally Posted by 48202

More homeowners.
More renters.
More taxpayers.
All good for Detroit

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Right on. IMO, Detroit is in no position to be selective or combative towards any type of investment that brings money and taxes back into the city.

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Originally Posted by DeLemur

Or that $1400 is unreasonable for a 700sqft apartment. This market is overhyped.

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Ya' think? I might consider $140/mo to live in a shoebox in a stack of shoeboxes.

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Originally Posted by SammyS

Out of interest, why is this a bad thing? Investors have more of an incentive to ensure value in the market and in just about every case, they are forward looking. Additionally, what's the situation with other thriving cities? I'd bet their downtowns and immediate adjacent neighborhoods are skewed towards renters for obvious reasons.

As I've mentioned before, investors are those that see opportunity and willing to take risk when no one else will. That's exactly what Detroit needs. If they're not welcome here, then I'm sure they'll find opportunities elsewhere.

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For the most part, it's not a bad thing. I'm just concerned about the investors looking for the "quick flip" then a irresponsible landlord gets the property, and neglects to pay the taxes, and those renters will be put out because of their negligence. You see and hear about this all too often, and it's a cycle that repeats itself, and is detrimental for Detroit to move forward.

Great thread with some excellent posts on both sides. I agree that all investment in housing should be welcomed completely tho at the same time issues facing owner occupied housing have to be addressed.

The new construction gap needs to be closed. Waiting for the market to overcome it or solely relying on NEZ is wasting critical time.

The financing issues need to be aggressively worked on. The lack of comps is also a time consuming problem throwing a wrench in the forward momentum.

Unfortunately both these problems require action at the state level. Expecting a city to solve them on its own is unreasonable.

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Originally Posted by emu steve

Or downtown and Midtown is sucking all of the oxygen out of the 'close in' housing market [[or at least at that price point).

If I understand the downtown/Midtown/etc. housing market: Lot of demand but a lot of supply coming on the market too.

If so, some spots will be hot and others cool.

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What makes you say that about downtown and midtown? I see purchase prices are dropping on apartments in Midtown. Is the Kales, Whitney and Scott filled up? [[I don't think so) If the supply is already showing anywhere to me at this point [[before The District, Brush Park housing comes on) then prices will probably drop. Plus auto will hit a slowdown. I don't think it'll be severe but we have to be real about the speed of the last 3 years in Detroit housing. We're not San Fran, NY or even Portland. Hell we're not even Chicago. We're due for a course correction.

Investors are fine as long as they're not doing land contracts. Those things need to be outlawed. Totally sketchy.