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2009-10-26 Economy
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Detroit house auction flops for urban wasteland
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 In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded.
After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag.
"OK," he said. "We only have 300 more pages to go."
There was tired laughter from investors ready to roll the dice on a city that has become a symbol of the collapse of the U.S. auto industry, pressures on the industrial middle-class and intractable problems for the urban poor.
On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters. Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York's Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.
Thanks for all the hard work Mr. Coleman ...
The tax foreclosure auction by Wayne County authorities also stood as one of the most ambitious one-stop attempts to sell off urban property since the real-estate market collapse.
Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days. The county had no estimate of how much was raised by the auction, a second attempt to sell property that had failed to find buyers for the full amount of back taxes in September.
The unsold parcels add to an expanding ghost town within the once-vibrant town known worldwide as the Motor City. Critics say the poor showing at the auction underscores the limits of using a market-based system to clean up property tax problems. They say the system has enriched a few but failed to deliver a way for Detroit to staunch its dwindling population and could worsen the vacancy crisis.
Or one could say that Detroit is so far gone that no one wants it. Might be better to bulldoze the city and rebuild anew.
One proposed alternative would have officials take control of the tax foreclosure process through a land bank program of the kind being used to revitalize the nearby city of Flint.
To the extent that one could say that Flint is 'revitalizing'.
The stakes in the debate are rising. The number of Detroit properties in tax foreclosure has more than tripled since 2007 and seems certain to rise further. The lots for sale last week represented arrears from only 2006, well before the worst of the downturn for U.S. automakers.
Keep in mind that this is a city where property values and home sales were in the gutter a decade ago thanks to 40 years of mismanagement, corruption, fraud and racial baiting on all sides. So if it's only gotten worse in the last year it's done so on a thoroughly rotten base.
"We have to keep in mind that GM and Chrysler filed for bankruptcy this year," said Terrance Keith, chief deputy treasurer of Wayne County. "Some people are going to be totally tapped out next year."
Detroit, already stuck with a $300 million budget deficit, is responsible in the meantime for cutting the weeds and responding to fire calls for thousands more abandoned lots.
Many potential homeowners that Detroit desperately needs said they felt penalized by the auction process. They mostly found themselves outbid by deeper-pocketed investors from California and New York who were in a race to claim the auction book's relatively few livable properties.
That's how an auction works. Good intentions and proper attitude matter less than the ability to put cash down at the gavel.
Dozens of potential bidders, mostly local residents, were turned away on the first day of the auction by deputies after they failed to meet the morning deadline for registration.
Ross Wallace, a lieutenant in the U.S. Army, turned in his check for $500 and waited on the auction floor in full dress uniform for a chance to buy a Detroit house on the cheap. Wallace, 27, said he did not want to leave his fiancee and two children with a mortgage before shipping out to Iraq later this year.
"I still have student loans and I'm trying to be responsible. I don't want to leave debt," he said. 
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Posted by Steve White 2009-10-26 00:00||
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Posted by lord garth 2009-10-26 05:07||
2009-10-26 05:07||
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Posted by Procopius2k 2009-10-26 08:17||
2009-10-26 08:17||
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Posted by Mike Kozlowski 2009-10-26 10:19||
2009-10-26 10:19||
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Posted by Jish Speaking for Boskone5552 2009-10-26 13:36||
2009-10-26 13:36||
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Posted by ed 2009-10-26 19:24||
2009-10-26 19:24||
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Posted by JohnQC 2009-10-26 19:34||
2009-10-26 19:34||
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