Empty Homes Dot Oakland County's Upscale Suburbs

[BrushStart]

http://www.detnews.com/article/20110...pscale-suburbs

I am not posting this to start another tiresome anti-suburbs debate, or to ignite another notoriously irritating city-vs-suburbs thread, but I want to hear what people think about the trouble some communities might be in going forward, how best to solve coming problems, and if there is a silver-lining.

Now that even well-to-do communities like the Bloomfields and Birmingham have 10%+ residential vacancy rates, what is going to happen to the region?

For right now, these communities are able to maintain vacant properties and keep up appearances, but as these cities become more cash-strapped, the level of upkeep and maintenance will probably dwindle.

If a street has 20 houses on it, and two become vacant, it's likely surrounding home values have gone down. At some point, your neighbors might get fed up and walk away from their mortgage and now you have 3 vacant homes. An investor might buy a fourth home through a short-sale and rent it to a tenant who doesn't care about the property. A year later, the city might stop maintaining the three vacant properties. Now, you have what used to be an exclusive street with three unmaintained vacant homes that are starting to look ragged, and a renter for a neighbor who is letting his house go to shit. Because more residents have starting leaving and property values have sunk, the tax base shrinks, city services are getting worse, and more people begin to leave. The city tries in vain to raise taxes on those who are left, but low and behold, it exacerbates the problem by causing more flight. Local businesses start to dry up and leave town creating vacant storefronts and further declining property values. All the while, you're sitting there and your home's value continues to free-fall. Eventually, you start wondering when you should leave.

The hypothetical above sounds a lot like what has been happening in Detroit for the last 50 years. It's the cycle of death for cities and towns. How are places like the suburbs going to deal with these issues as they happen? I think it is clear that the early symptoms are setting in. Obviously, Detroit did not cope well or address these problems adequately. So, the drawing board is ripe for ideas on how to reverse these trends. This region can't afford to lose anymore ground, especially its flagship pockets of wealth and success.

[DetroitDad]

Already being discussed here: http://www.detroityes.com/mb/showthr...ainable/page34

[BrushStart]

Already being discussed here: http://www.detroityes.com/mb/showthr...ainable/page34

Thanks DetroitDad, but nobody has picked up on it in that thread. I'd really like it if this thread could remain independent. I want this discussion to take a different direction as opposed to debating whether the suburbs are "sustainable." The question here is, how can the region be sustainable as we face impending vacancy rates and the problems that come with it?

[Goose]

if this happens to suburbs like birmingham then the rich have either 1. moved to a different SE michigan suburb or 2. moved out of state

most likely, what i've experienced in GP, the neighbors will maintain the property above and beyond what is required by the city, i currently live within 5 houses of 2 homes in GP that I know have been vacant for over 2 years, repos.... you can't tell from driving by.....

have some pride in not only your home but its surroudings and you will be fine...

[DetroitDad]

Thanks DetroitDad, but nobody has picked up on it in that thread. I'd really like it if this thread could remain independent. I want this discussion to take a different direction as opposed to debating whether the suburbs are "sustainable." The question here is, how can the region be sustainable as we face impending vacancy rates and the problems that come with it?

Get rid of Detroit? Maybe leave her for some much younger or attractive city, abandoned like a ageing bride, left at the alter after a decade long courtship.

Heck, we don't value each other enough to avoid infidelities and back stabbing, why would we find anything wrong with cheating on our community?

The region is overbuilt, and too spread out, not to mention bleeding population. This "feel good" regionalism sounds nice, but I don't see how we can, or why we would want to, keep unsustainable portions of the region. It's just unrealistic, you know?

BTW, my wife and I went to visit family out in the extreme exurbs. It seems that some developments have resumed. I can imagine a future civilization excavating our great cities and wondering; "how did these silly people ever expect to survive".

[BrushStart]

if this happens to suburbs like birmingham then the rich have either 1. moved to a different SE michigan suburb or 2. moved out of state

most likely, what i've experienced in GP, the neighbors will maintain the property above and beyond what is required by the city, i currently live within 5 houses of 2 homes in GP that I know have been vacant for over 2 years, repos.... you can't tell from driving by.....

have some pride in not only your home but its surroudings and you will be fine...

I agree with this completely. I think many suburbs are going to have to take an approach similar to what neighborhoods have done in Detroit and Grosse Pointe. That is, form neighborhood associations, pitch in and pick up the slack, and promote your neighborhood in the best ways that you can.

Metro Detroit really needs to form a regional task force to help market and promote the region outside of Michigan. It needs to reverse the negative image held by the general public. It also needs to maintain what it has while slowly adding infrastructure that other large metros take for granted. We also need to have regional cooperation on a number of big issues, but also agree to suspend the construction of new homes on the fringe. Every new home that goes up adds to the gluttonous oversupply of housing, which drags existing home prices down. If the region's population was growing, it would be one thing, but it is in fact shrinking. More homes + less people = big problems.

[BrushStart]

DetroitDad, I was writing while you posted, and clearly there are many similarities in thought processes on this issue. I am not ready to concede that much of the Metro is completely unsustainable, though. I think it is realistic to find solutions, including putting a moratorium on new construction, once people everywhere start to be affected and it is not just "Detroit."

[mwilbert]

I think it is too early to say for sure what the vacancies mean. My guess is that the problem in the more desirable areas is mostly a combination of the slow progress of properties through the foreclosure process and owners who are holding on because they still have unrealistic ideas about what houses should sell for. In a few years the vacancy rates in a lot of these places will probably fall back to their historic levels.

On the other hand, this is a game of reverse musical chairs, and a bunch of houses somewhere in the region are going to end up with no people. A lot of those houses are going to be in Detroit, but a lot of them aren't.

[brizee]

Even our blight is better.

This state is doomed.

[313WX]

This state is doomed.

lol, that's the first time I've heard someone say something like that.

I didn't think there was anything better about any type of blight, it's all bad.

[casscorridor]

Merge Wayne, Oakland, Macomb, Washtenaw and Livingston into one metro Detroit government, ban all new greenfield development and promote growth within the core of the region [[current city of Detroit).

[mwilbert]

People aren't even close to thinking things are serious enough to require a solution of that magnitude.

[Bham1982]

As someone actively looking to buy a Birmingham 4-bedroom, I can tell you the problem is that sellers aren't coming down in price, and so properties sit on the market.

A non-wreck, non-foreclosed family size home for under 400k is very rare. If you know of one, please let me know!

I [[and apparently others) refuse to accept these asking prices, and so homes will sit, until either the economy fully turns around, or until sellers capitulate.

And, BTW, the hopeful "cycle of death" comments in this thread are a joke. Feel free to your alternate reality if it gives you schadenfreude.

[Jimaz]

We're All In This Together

[mwilbert]

A non-wreck, non-foreclosed family size home for under 400k is very rare. If you know of one, please let me know!

I [[and apparently others) refuse to accept these asking prices, and so homes will sit, until either the economy fully turns around, or until sellers capitulate.

I don't claim to know what this means, and fact that one is median and one is average may create a comparability problem, but these numbers from Trulia are kind of interesting:

Birmingham average listing price: $586,983
Birmingham median sales price: $199,900

For comparison:

Huntington Woods average listing price: $242,912
Huntington Woods median sales price: $145,000

Bloomfield Hills average listing price: $630,427
Bloomfield Hills median sales price: $174,750

I think what is happening is that the higher-priced homes aren't selling, and keep the average listing price up, while the lower priced stuff is selling better and keeping the median sales price down. I think I'd be inclined to wait for capitulation, especially because the only way mortgage rates will stay as low as they are is if there is another dip in the economy.

[NorthEndere]

And, BTW, the hopeful "cycle of death" comments in this thread are a joke. Feel free to your alternate reality if it gives you schadenfreude.

You are so delusional that it'd be funny if it didn't happen to be so sad. The Census revealed the entire base demographic for the region has fallen out the bottom, and you're still holed up inside your head thinking that all decline in the region is localized. "Fortress [[fill in the suburbs)" indeed.

Michigan lost over 800,000 jobs over the decade. That the population only fell by a bit over 50,000 shows that there is probably quite a bit more bleeding to do before we're even primed to go on the way back up. Michigan [[and particularly Metro Detroit) has years worth of housing inventory to feel, years worth of employment to be made up...etc...and that's just to get back to where we were ten years ago. How you can constantly parrot this idea that a few bright spots that there are any longer islands unto themselves anywhere in this metro is just insane. With a literal handful of exceptions, every community that grew in metro Detroit did so from capturing migration from within the metro. That's not real nor is is sustainable growth.

[DetroitDad]

if this happens to suburbs like birmingham then the rich have either 1. moved to a different SE michigan suburb or 2. moved out of state

most likely, what i've experienced in GP, the neighbors will maintain the property above and beyond what is required by the city, i currently live within 5 houses of 2 homes in GP that I know have been vacant for over 2 years, repos.... you can't tell from driving by.....

have some pride in not only your home but its surroudings and you will be fine...

Abandoned neighborhood cathedral near several Detroit neighborhoods famous for their abandoned mansions.

Maybe, but I think that is not realistic across the board. it's a little unrealistic to suggest people keep up their neighbor's homes for the remainder of the decade. There are several reasons why I am calling this unrealistic:

1. First, these aren't your typical homes. Check out this neighborhood in Birmingham.
2. There is a second mortgage crisis hitting us right now. The graph below was something that was posted on here some time ago, and it illustrates the residential mortgage resets that are occurring or are set to occur over the next couple years.
   
   
   
   
   
   Default rates can further be predicted by combining resets with known historic default rates. Alt As and Adjustable ARMs have a historic default rate of 50%-60%. So, from that we can start to predict default rates into the future. On top of this, are the affects of the amount of people underwater on their mortgages. It turns out, the greater and deeper the rate of underwater mortgages, the more strategic defaults we have; people walking away from their homes. This suggests higher than expected default rates among all mortgage types, including prime mortgages. This mess also has other issues of coinciding with commercial mortgage issues, high commodity prices, and mass government layoffs.
   
   
   
   
3. Historically, Detroit has been segregated by income. The wealthy and middle class move out when the poor move in. We don't build communities here, we move to them. Plenty of our wealthy are a fluid group, with little attachment to community.

A Gilded Age mansion near Downtown Detroit, the owners have long since walked away from the property.

Sources, statistics, and inspiration:

• 60 Minutes - The Second Mortgage Crisis Looms
• 60 Minutes - The Second Mortgage Crisis [[Follow up)
• Documenting the collapse of the housing bubble
• Understanding mortgages types, and looking ahead
• Idle conversation with my daughter at the end of the world [[outside St. Agnes Cathedral)
• A tour through Detroit's Gilded Ruins
• Boston Edison Homes For Sale
• Michigan mansions
• 60 Minutes - Strategic Default, America is walking away
• You Walk Away - Help For Underwater Homeowners
• Racism Chasing: The Business of Descrimination

Mansion in the troubled Boston Edison historic district. Boston Edison survived Detroit's termoil by not budging on prices, it's sense of community, and it's ability to create rules to keep out "undesirables".

[Hermod]

I don't claim to know what this means, and fact that one is median and one is average may create a comparability problem, but these numbers from Trulia are kind of interesting:

Birmingham average listing price: $586,983
Birmingham median sales price: $199,900

For comparison:

Huntington Woods average listing price: $242,912
Huntington Woods median sales price: $145,000

Bloomfield Hills average listing price: $630,427
Bloomfield Hills median sales price: $174,750

I think what is happening is that the higher-priced homes aren't selling, and keep the average listing price up, while the lower priced stuff is selling better and keeping the median sales price down. I think I'd be inclined to wait for capitulation, especially because the only way mortgage rates will stay as low as they are is if there is another dip in the economy.

I would guess from the data that the large spreads in Birmingham and Bloomfield Hills might indicate a quantity of really high end multi-million dollar homes on the market. When you have a large spread between the median and the mean, it means the data must follow a log-normal or Pareto distribution.

[Bham1982]

You are so delusional that it'd be funny if it didn't happen to be so sad. The Census revealed the entire base demographic for the region has fallen out the bottom, and you're still holed up inside your head thinking that all decline in the region is localized. "Fortress [[fill in the suburbs)" indeed.

Those living in the real world like facts, not conjecture.

The fact is that Birmingham's population is growing, per the Census.

The fact is that Birmingham's core has never been healthier, per commercial rental rates.

The fact is that family sized homes under 400k are nonexistent.

The fact is that Birmingham has a budget surplus.

If you want to believe otherwise, that's your perogitive.

No-one said any community is a fortress. But obviously there is a very high degree of variability among communities. Much as it pains some folks, many local communities are extremely healthy and vibrant.

Frankly, I would [[very selfishly) like to see a little more "distress" in the Birmingham housing market. Folks aren't dropping their sales price into my range.

With a literal handful of exceptions, every community that grew in metro Detroit did so from capturing migration from within the metro. That's not real nor is is sustainable growth.

This, IMO, is complete nonsense.

How is growth that comes from another jurisdiction "not real nor sustainable"?

99% of communities grow in exactly this manner.

Outside of Mormon Utah or immigrant barrios, birth rates aren't high enough for growth absent newcomers.

[mwilbert]

While there are various distributions that have wide variations between the median and the mean, in this case there is no reason to think these numbers apply to the same population--it seems most likely that the houses that are selling do not have the same characteristics as the houses that are listed.

[Bham1982]

The vacancy rates in Bloomfield and Birmingham are for totally different reasons, BTW. Certainly both cities have rates that are way too high, but very different housing markets.

In Bloomfield [[Township, not Hills), you have lots of older ranch and colonial homes that have had huge price cuts. Higher end stuff is sitting too, but doing much better. The 60's era neighborhoods aren't doing very well [[at least, not well compared to the past).

Bloomfield Hills proper is in better shape. Franklin too.

West Bloomfield is hurting the most. WB schools aren't as good, and lots of crap housing in WB. Also some demographic change that worries some folks.

In Birmingham, you have a weird market that doesn't have a SE Michigan equivalent. Birmingham has a strange mismatch between housing type and consumer preference.

Birmingham [[historically) had a fairly modest housing stock [[excepting Quarton Lake and Poppleton Park neighborhoods), but the current demographic that wants to live in Birmingham doesn't want the modest bungalow housing.

So what happened? Roughly 30% of Birmingham units have been replaced over the last few decades. Birmingham is Land of the Teardown, and prime streets are almost all teardowns.

The remaining stock of ranches basically have all their value in the land. The teardown market fell of a cliff in 2008, so the bungalow market stopped dead. But the bigger homes have not dropped much in asking price.

[mwilbert]

How is growth that comes from another jurisdiction "not real nor sustainable"?

Time for a metaphor!

If I had a cistern that drew water from a pond, I'd be worried if the pond were drying up even if the cistern were full. I'd be even more concerned if there were no other obvious sources of water around.

You seem to think that there was a dry spell that has ended, or at the least eased, while some other people think we are not anywhere near the end of the drought. Given that difference, it is clear why you would be more optimistic than those people, but it is equally clear why they think you are ignoring clear danger signs.

[Bham1982]

it seems most likely that the houses that are selling do not have the same characteristics as the houses that are listed.

I think this is probably correct for Birmingham, given the spread between asking and selling, and given my monitoring of local closings.

Lots of folks think Birmingham has always been fancypants-town, but this was traditionally a modest bungalow town. The $3 million homes are all of recent vintage. Bungalows are still prevalent [[but disappearing by about 50 homes per year).

[mwilbert]

Lots of folks think Birmingham has always been fancypants-town, but this was traditionally a modest bungalow town. The $3 million homes are all of recent vintage. Bungalows are still prevalent [[but disappearing by about 50 homes per year).

Not me. I remember clearly when they started doing the teardowns and grotesque additions on way-too-small lots. I didn't like the old houses [[they generally weren't very nice bungalows) either, but the neighborhoods looked better before. Maybe they will look better when all the bungalows are gone, but I doubt it.

[softailrider]

The vacancy rates in Bloomfield and Birmingham are for totally different reasons, BTW. Certainly both cities have rates that are way too high, but very different housing markets.

In Bloomfield [[Township, not Hills), you have lots of older ranch and colonial homes that have had huge price cuts. Higher end stuff is sitting too, but doing much better. The 60's era neighborhoods aren't doing very well [[at least, not well compared to the past).

Bloomfield Hills proper is in better shape. Franklin too.

West Bloomfield is hurting the most. WB schools aren't as good, and lots of crap housing in WB. Also some demographic change that worries some folks.

In Birmingham, you have a weird market that doesn't have a SE Michigan equivalent. Birmingham has a strange mismatch between housing type and consumer preference.

Birmingham [[historically) had a fairly modest housing stock [[excepting Quarton Lake and Poppleton Park neighborhoods), but the current demographic that wants to live in Birmingham doesn't want the modest bungalow housing.

So what happened? Roughly 30% of Birmingham units have been replaced over the last few decades. Birmingham is Land of the Teardown, and prime streets are almost all teardowns.

The remaining stock of ranches basically have all their value in the land. The teardown market fell of a cliff in 2008, so the bungalow market stopped dead. But the bigger homes have not dropped much in asking price.

I'm currently renovating a 1960's era colonial in Bloomfield Village that we're going to move into when it's completed. Since 2-16-10 the average SELLING price of single family dwellings in Bloomfield Village [[ which is in Bloomfield Township, NOT Birmingham ) is over 546,000.00. In that same time peroid, there were only three sales above one million.

In the city of Birmingham itself, I see teardown / bigfoot single family dwellings listed in the 400,000.00 plus range as you go further South towards 14 Mile Road. That is way less then they were selling for when the market reached it's zenith.