Light Rail and Woodward Corridor speculation

There has been a lot of talk that the forthcoming light rail system will be a harbinger for future development and further rehabilitation of Woodward. Many Detroiters have a collective anticipation and hope that this transit system will spur both commercial and residential high density infill development. The light rail system is viewed as one very important piece in creating safe, walkable urban districts, if not entire neighborhoods. For my own part I believe that the light rail will be a catalyst for all of the above, as I have observed the development that light rail brings in other cities, and it is impressive.

My question to the board is this: Are there any light rail speculators out there? Anyone waiting for the light rail construction to begin before they purchase a property, invest/rehabilitate a property, or start a business on Woodward? Anyone thinking about getting in before all the subsequent development begins?

In the interest of full disclosure, I will be the first to answer my own question, and hopefully bunk some light rail naysayers. I recently purchased a property in Woodbridge. I am between a 5 and 10 minute walk to the proposed light rail station at Warren and Woodward. I made this decision because I want to live, work, and play close to mass transit, and I want to do it in Detroit [[although I can afford a place in Midtown and enjoy the area, I prefer the charms of Woodbridge).

I have heard many of the "get in early" proclamations in Detroit over the years, but this time, this era, is different. And we are in a new era. The emphasis and focus on Detroit is, at least in my lifetime, unprecedented, and the momentum and potential is growing every day.

2016 is a long time away, and the light rail may not be operational then, but it's coming, and I can't wait to hop on The Woodie and take it down to the ballpark, the new ice rink/basketball stadium, the River Walk, or the airport or even for a night out in Ann Arbor.

Welcome to the forum, Zozo! Although there are many issues facing Detroit, there isn't a doubt in my mind that light rail on Woodward will spur development along the corridor. We've seen many new developments already, and light rail can only increase the likelihood of new businesses, residents, etc.

Just one thing...we ain't gonna call it the "Woodie".

Is there a way to tax the increase in value of these properties so that we get real developers and not just speculators?

I'm hoping to purchase a home in the Woodward corridor area, but they are pricing many of us young professionals out. My friends are buying in Corktown or in Lafayette Park. Real estate in Midtown and Brush Park is still for those pulling down six figures, apparently... as are rents in non-student properties.

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Originally Posted by English

I'm hoping to purchase a home in the Woodward corridor area, but they are pricing many of us young professionals out. My friends are buying in Corktown or in Lafayette Park. Real estate in Midtown and Brush Park is still for those pulling down six figures, apparently... as are rents in non-student properties.

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The Brush Park Condos are going for less than $100k. Many in the $70s and $80s. I don't believe one needs to be making six figures to buy something that is selling for less than six figures.

Looked at those. People in the know warned me off because of the taxes.

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Originally Posted by Dabirch

The Brush Park Condos are going for less than $100k. Many in the $70s and $80s. I don't believe one needs to be making six figures to buy something that is selling for less than six figures.

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You're kidding me. They are that cheap?

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Originally Posted by Detroitnerd

Is there a way to tax the increase in value of these properties so that we get real developers and not just speculators?

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i'm not sure the city has much it can do to stop speculators. As far as the city is concerned, the taxes can only be based on assessed value from what I understand. However, I'm sure they could impose timelines to spur development sooner as opposed to later. The problem with that is they don't have the personnel to ensure development/redevelopment work is taking place.

It would be great to keep speculators out. Unless the city could hand-pick the purchaser, there's no way the city would know the buyer's intent.

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Originally Posted by English

I'm hoping to purchase a home in the Woodward corridor area, but they are pricing many of us young professionals out. My friends are buying in Corktown or in Lafayette Park. Real estate in Midtown and Brush Park is still for those pulling down six figures, apparently... as are rents in non-student properties.

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English, is the impending light rail influencing your decision? If it wasn't for the light rail, would you be buying in Detroit?

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Originally Posted by Zozo

In the interest of full disclosure, I will be the first to answer my own question, and hopefully bunk some light rail naysayers. I recently purchased a property in Woodbridge. I am between a 5 and 10 minute walk to the proposed light rail station at Warren and Woodward. I made this decision because I want to live, work, and play close to mass transit, and I want to do it in Detroit [[although I can afford a place in Midtown and enjoy the area, I prefer the charms of Woodbridge).

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Since pretty much most of the private housing east of Trumbull has been bulldozed, I'm going to assume that you live or plan to live west of Trumbull. While walking to Woodward, you cross 3 different North/South bus routes. Walking 1/10th of the distance west to Grand River gives you access to a bus route with 10 min. daytime intervals. Riding your bike to Comerica Park is even faster than driving on game day. Although I share your enthusiasm for Light Rail, I find your personal choice in transit options highly inefficient.

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Originally Posted by English

Looked at those. People in the know warned me off because of the taxes.

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Don't know what the tax problem could be. Right now the Woodward Place units have an NEZ designation that keeps the taxes at pocket change levels for about 5-6 more years. After that taxes will revert to fair market level which is approximately $3,200 per $100K of market value. Kind of expensive but no different than anywhere else in the city.

Right now the Woodward corridor is a bargain for first time buyers. There are a ton of units built in the last ten years that can be purchased for about 50%-60% of their construction cost. For about $800 per month somebody can finance a 2BR + den unit at Woodward Place. Anybody with decent credit and a $45K income should be able to qualify for such a purchase. An employed couple with $100K in combined income could easily snag a 2BR unit at the Book Cadillac which has the highest per square foot prices in the neighborhood.

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Originally Posted by swingline

Don't know what the tax problem could be. Right now the Woodward Place units have an NEZ designation that keeps the taxes at pocket change levels for about 5-6 more years. After that taxes will revert to fair market level which is approximately $3,200 per $100K of market value. Kind of expensive but no different than anywhere else in the city.

Right now the Woodward corridor is a bargain for first time buyers. There are a ton of units built in the last ten years that can be purchased for about 50%-60% of their construction cost. For about $800 per month somebody can finance a 2BR + den unit at Woodward Place. Anybody with decent credit and a $45K income should be able to qualify for such a purchase. An employed couple with $100K in combined income could easily snag a 2BR unit at the Book Cadillac which has the highest per square foot prices in the neighborhood.

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Problem being, they'd never be able to sell it. The supply of lofts and condos far outstrips demand. There should be a moratorium on building any new condos or lofts meant for sale. Allow those who bought some security that there won't be a new development going up diluting the market further.

How do you know there is more supply than demand? Show your work, please.

Last time I spoke with a reputable player in real estate in Midtown / Brush Park, the new developments/rehabs were ALL [[yes, all) near capacity. Whether they are renters or owners may be irrelevant.

Lets not pull statements from our asses, ok guys? Thanks.

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Originally Posted by Pcm

How do you know there is more supply than demand? Show your work, please.

Last time I spoke with a reputable player in real estate in Midtown / Brush Park, the new developments/rehabs were ALL [[yes, all) near capacity. Whether they are renters or owners may be irrelevant.

Lets not pull statements from our asses, ok guys? Thanks.

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Pot meet kettle

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Originally Posted by Russix

Although I share your enthusiasm for Light Rail, I find your personal choice in transit options highly inefficient.

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Which transit options have I chosen that you are personally aware of? You don't know what my daily schedule is like.

However I think you are intimating that if a light rail line were to exist along with a station at Warren and Woodward that I would be inefficiently going out of my way to ride it, as there are several north/south bus lines in the area I could reach faster. But part of the efficiency equation for me, at least, is being able to walk a decent distance for exercise while having an enjoyable experience. When I walk to Warren and Woodward [[to take the bus downtown, mind you) it shaves time off my exercise time in the evening. This is time I can allot to more important things. Furthermore, the overall experience along the hike to Warren and Woodward is much more preferable to me. It's nice to walk by the Woodbridge Pub and see people enjoying themselves with their friends; it's nice to see people having a good time being active at Adams Field; it's nice to skirt WSU and see the young people walking about. It's not nice at all walking westbound through dumpy stretches of Warren and having to deal with the homeless on Grand River. So while you find my choices in transit inefficient, it works quite well for me.

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Originally Posted by Pcm

How do you know there is more supply than demand? Show your work, please.

Last time I spoke with a reputable player in real estate in Midtown / Brush Park, the new developments/rehabs were ALL [[yes, all) near capacity. Whether they are renters or owners may be irrelevant.

Lets not pull statements from our asses, ok guys? Thanks.

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There is no way the condos in Brush park are near capacity. The realtor was blowing smoke up your ass. That's what realtors do to generate sales. All you have to do is look at the prices those units are going for. Units that were originally priced at $200,000 are sitting unsold at $90,000. Prices are still in freefall. Prices would be rising if demand outstripped supply.

I owned one of those units for 8 years. I sold it about 3 years ago. It was a nightmare to sell and I was lucky I sold it for what I paid for it. After I sold mine prices continued to fall. My neighbor thought I was an idiot for selling mine for the price I did. Now three years later his is still on the market for 1/2 the price I sold mine for. [[Who was the idiot?)

The NZ on those units were for 11 years. At least half of the NEZ's have already expired with the rest expiring in the next few years. The NEZ on the unit I previously owned would have expired this January.

Now you should be able to contest the assesments. There is no way the city can justify the way high assessed values now that the condos prices have collapsed.

One look at he listings would show you that there is over supply and limited demand.

http://www.realtor.com/realestateand...ch/48201/sby-1

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Originally Posted by ndavies

There is no way the condos in Brush park are near capacity. The realtor was blowing smoke up your ass. That's what realtors do to generate sales. All you have to do is look at the prices those units are going for. Units that were originally priced at $200,000 are sitting unsold at $90,000. Prices are still in freefall. Prices would be rising if demand outstripped supply.

I owned one of those units for 8 years. I sold it about 3 years ago. It was a nightmare to sell and I was lucky I sold it for what I paid for it. After I sold mine prices continued to fall. My neighbor thought I was an idiot for selling mine for the price I did. Now three years later his is still on the market for 1/2 the price I sold mine for. [[Who was the idiot?)

The NZ on those units were for 11 years. At least half of the NEZ's have already expired with the rest expiring in the next few years. The NEZ on the unit I previously owned would have expired this January.

Now you should be able to contest the assesments. There is no way the city can justify the way high assessed values now that the condos prices have collapsed.

One look at he listings would show you that there is over supply and limited demand.

http://www.realtor.com/realestateand...ch/48201/sby-1

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I believe his point is that they are all occupied [[or nearly). Looking at sale prices only shows one half of the picture. The other half of the picture is to look at the rental prices of similar units in the area.

Sale prices are the only reliable measure. If you have high rental prices and low purchase prices, the people moving into the area think of this place as a temporary place to live. They don't see it as a place they should invest their own money.

With current prices you cold own one of those units for about 1/2 the monthly payment it would cost you to lease.

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Originally Posted by ndavies

There is no way the condos in Brush park are near capacity. The realtor was blowing smoke up your ass. That's what realtors do to generate sales. All you have to do is look at the prices those units are going for. Units that were originally priced at $200,000 are sitting unsold at $90,000. Prices are still in freefall. Prices would be rising if demand outstripped supply.

I owned one of those units for 8 years. I sold it about 3 years ago. It was a nightmare to sell and I was lucky I sold it for what I paid for it. After I sold mine prices continued to fall. My neighbor thought I was an idiot for selling mine for the price I did. Now three years later his is still on the market for 1/2 the price I sold mine for. [[Who was the idiot?)

The NZ on those units were for 11 years. At least half of the NEZ's have already expired with the rest expiring in the next few years. The NEZ on the unit I previously owned would have expired this January.

Now you should be able to contest the assesments. There is no way the city can justify the way high assessed values now that the condos prices have collapsed.

One look at he listings would show you that there is over supply and limited demand.

http://www.realtor.com/realestateand...ch/48201/sby-1

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Great post but what makes it even worse is that we have seen this movie before--Folks with blinders on listening to developers blow smoke up their ass and then reality comes and smacks them in the face
When any developer says that all units are almost gone--watch out!!

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Originally Posted by ndavies

Sale prices are the only reliable measure. If you have high rental prices and low purchase prices, the people moving into the area think of this place as a temporary place to live. They don't see it as a place they should invest their own money.

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Uh... that is not correct. There is a price point for every community at which it does or does not make sense to rent vs buy [[or vice versa). This is true in any neighborhood where you have the option of renting or buying. Rising rental rates means that people are moving into the area, and at some point the rental rate will hit a point where it will make more sense to buy. When that point is hit the purchase prices for residential units will rise as more people opt to buy rather than rent. It really has less to do with how long an individual person plans to stay in a neighborhood than you suggest.

That said, I don't know whether the rental rates are rising or falling [[because I haven't bothered to look), but that information would effectively end this discussion.

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Originally Posted by Pcm

How do you know there is more supply than demand? Show your work, please.

Last time I spoke with a reputable player in real estate in Midtown / Brush Park, the new developments/rehabs were ALL [[yes, all) near capacity. Whether they are renters or owners may be irrelevant.

Lets not pull statements from our asses, ok guys? Thanks.

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What ndavies said.

Let me also add that in places where supply is meeting demand, there are not fire sales of "signature" properties like with the Book Condos or the Ellington lofts nor are there offers of 20k for down payment assistance to be paid by the developer as with Willys.

How about you not worry about what may or may not be pulled from asses and instead focus on pulling your head out of the sand.

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Originally Posted by Zozo

English, is the impending light rail influencing your decision? If it wasn't for the light rail, would you be buying in Detroit?

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The light rail is a bonus, but it's not necessary for my move. I'm a Detroit native who grew up in the 1980s and 1990s, and was a young adult living on my own in the early 2000s. I took the DOT bus until I was in my 20s, and used it before I finished undergrad to get back and forth to work. The best buses I took were Dexter and Woodward. If you live near the Woodward corridor, you get Woodward buses [[of course, the corridor is nothing like it was 10-15 years ago, but then again, nothing is).