Detroit Still Selling $1,000 Houses

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As Detroit emerges from bankruptcy, and the city crushes to the ground thousands of houses to clear neighborhoods of blight, it continues to have a program to sell $1,000 homes to people who will upgrade them and live in them.

“Building Detroit” is the auction’s online clearing house. It lists scores of $1,000 homes. Most are miniature, with one or two bedrooms and one bathroom. All are in the poorest parts of the city. There is some irony in the fact that these are close to some of the areas where the city is destroying houses.

“Building Detroit” is still exceedingly modest. Only two houses a day get auctioned. The rules for the purchase are the same as when the process started several months ago:

•    You must be a Michigan resident, a non-Michigan resident who will live in the property after rehab, or a company or organization authorized to do business in Michigan.
•    You, or any legal entity in which you have an ownership interest, cannot have unpaid delinquent property taxes on properties located in Wayne County, or have lost property to back taxes in Wayne County in the last three years.
•    You, or any legal entity in which you have an ownership interest, cannot have material unresolved blight or code violations in the City of Detroit.
•    You cannot have won a previous auction and then failed to make the down payment, close on the purchase, or satisfy the conditions of bringing the property up to code and having it occupied within 6 months.
•    You are limited to the purchase of one property per month, and you cannot bid again until you have demonstrated a track record of satisfying the conditions of bringing the property up to code and having it occupied within 6 months. Once you have demonstrated capacity to complete rehabilitation on purchased properties and have them occupied within 6 months, you will be allowed to purchase more than one property per month.
•    If you use a legal entity to purchase the property, you must have an ownership interest in it. This legal entity, and all other legal entities in which you have an ownership interest, cannot bid again until it has demonstrated a track record of satisfying the conditions of bringing the property up to code and having it occupied within 6 months. Once the purchasing entity has demonstrated capacity to complete rehabilitation on purchased properties and have them occupied within 6 months, it will be allowed to purchase more than one property per month.

Even though the homes are inexpensive, the amount of paperwork is long and complex.

The drawback to the program is that it is so small and is not likely to get any larger or put a real dent in the city’s housing problem. Detroit had 1.5 million residents just over five decades ago. That number has dropped by more than half. The city covers a huge 138 square miles. Fully 38% of the residents live below the poverty line.

Sales of homes at the rate of two a day means that Detroit’s official work to destroy houses will happen at a rate of many times of that at which some of those homes are sold via the “Building Detroit” project.

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