Several American cities remain so blighted that they have thousands of unoccupied houses. Some of these houses have been bulldozed; others have been left to rot. In one city, the local government has created a program, now five years old, to auction off homes. It has scores of them available for prices starting as low as $1,000, and it’s sold hundreds more since the program began.
Detroit, which was once this country’s sixth-largest city, is one of the five American cities that has lost more than half its population since 1950. As the car industry collapsed, Detroit lost much of its tax base and filed for bankruptcy in 2013. Over the years, as the city foreclosed on homes with unpaid taxes, Detroit became one of its own largest real estate owners. It created the Detroit Land Bank Authority, which puts homes on the block, most for $1,000 apiece. Regularly, new homes are added to the list of those available.
The Land Bank lists properties on its website, which includes descriptions of the homes, their addresses, and photos, and when they were built. Each listing also has a countdown clock to show how long the listing will be available until the auction, and an “own it now” button. Potential buyers can tour the homes. Successful buyers get a “quick claim,” which transfers ownership to them immediately. The new owner is required to pay back taxes, liens, and past-due water bills. The only other major condition is that, “the program requires purchasers to rehab the house and have it occupied, or demolished, in accordance with city code within 6-9 months of closing.”
A very modest number of homes put up for auction in the recent past were priced above $1,000, but they are the exception. Detroit has a very long list of homes it will sell for $1,000, and a long list of others it has already sold at that price.
How successful has Detroit’s $1,000 home prices program been? There are over 40,000 vacant homes in Detroit. It is hard to imagine that most will be sold. However, the Land Bank continues at a brisk pace of new listings at the stunningly low prices. One reason, of course, is that Detroit is one of America’s most dangerous cities.