I sold our house last month for, it could be argued, about $100,000 less than it was worth when we purchased it seven years ago. Did I make the right decision? The answer depends on who you ask.
If you live in Metro Detroit, chances are good that your property – if you are lucky enough to own a little patch of dirt here – has a value of 30 to 50 percent less than what you paid for it. We are one of the most depressed real-estate markets in the nation. We lead the way in foreclosures much of the time.
Yet home ownership continues to do well here. People are buying. While housing supplies are plentiful right now, real-estate experts say the numbers could start shrinking in a positive way. When there’s less supply, demand rises. And with a rising demand come rising prices. And, as everyone knows, rising prices makes for a happy region of sellers.
Truly, everything eventually sells. Take my house, for example. It’s a lovely three-bedroom abode on the East side. We do not have a first-floor bathroom. The kitchen dates back to 1947. Did I mention our rolling dishwasher? Then there’s the lovely converted back porch that passes as a family room. But our house did sell … after 42 house showings, 110 days on the market and a price reduction.
This week, I spoke with Austin Black II, the broker/president of City Living Detroit, a client-centered, full-service, boutique-style real estate sales and marketing firm that specializes in urban living, including lofts, condos, historic homes and apartments. He sells oodles in the city itself and within Metro Detroit.
He is optimistic about our region and his business. Yes, I know – he would be nuts to say otherwise. But my brief experience in real estate has me agreeing with the successful Mr. Black. Plus, he has six years of selling experience to back up his statements, so he has seen some of the region’s highs and ALL of its recent lows.
Here’s why he believes Detroit has some power in its future – there have been no new developments in certain neighborhoods since 2008. And with the housing incentives like Live Midtown that some employers are offering – can you say $20,000 down payment? – there seems to be a serious uptick in interest over the past 12 to 16 months, he said. He himself has represented three developments in the Midtown region, and two of them are now sold out. Incentives + low inventory = demand.
The challenge is getting appraisals to come in for what the property is worth – in terms of what both the seller wants and what the buyer is willing to pay. Our house faced this dilemma as well; we squeaked by on appraisal, and it came in exactly at what our buyers were willing to pay for the joint. Black said some buyers are willing to bring cash to the table to close their deals when appraisals come in too low, and that partly is what is helping real-estate values around the area.
No investor or developer is going to want to build in a region where the appraised value comes with a giant loss, Black said. So we’ve got to get more good properties to sell than what are known as “depressed” or foreclosed places. Those purchase prices have to come up. Appraisals have to come in at the right level.
“We need to begin strategizing what the next phase of growth is going to be,” Black told me. “We need to address the supply issue and address what buyers are looking for in Detroit.”
That means having more variety of housing available: larger condos for young professionals, luxury lofts for empty nesters, nice places for families to spread out. Having a cross-section of price points and construction styles will give Detroit some of the lift it needs.
One example that he is working on is Willys Overland Lofts, a 75-unit Midtown development with units priced from $120,000 to $640,000. Check out these features: Exposed concrete ceilings, brick walls, indoor heated parking, balconies, terraces, spectacular downtown views and custom finishes. Beauty.
About 16 units are closed and sold, Black said. What makes these units special is that they are not built until you buy, which means you can create your own floor plan, pick the finishes and all that “House Hunters” style stuff. It must be within reason, of course. No disco floors or jungle rooms, please.
As for me, I’m pretty content albeit busy these days. I’m packing up to move my family to a larger home that I adore. Yes, it’s got problems. Pretty much everything in my price point is odd right now – if you can afford to sell, you probably are moving up and out of a house you think it flawed or needs renovation. Otherwise, most people are staying put.
We could afford to move mostly because we wanted to renovate our little piece of heaven. We had been saving diligently for six years. But with the market so depressed in our community, we decided to skip the reno and do “The Jeffersons” thing. It was time to move on up. I don’t mean to sound light about our decision — it took six months of painful discussion and emotion to get here. There was enough on the market here to choose from, and our house was available for a couple months before we made our offer. So we could bide our time and look around.
All areas are different — I know my friend who is looking in Milford keeps losing houses because eight people swarm on every new listing. So with hot real-estate markets like that, maybe those doom-and-gloom headlines aren’t entirely right.
In closing, I’ll say one thing to sum up my decision to sell, move and buy – I’m not leaving this next place until they roll me out. It has been one of the most difficult times in my tiny little life, and I’ll be glad to settle down permanently in my own little patch of dirt.