Farmington Hills Real Estate and Events talk Michigan

So many baby boomers and people that are already retired are wondering how long before the Southeastern Michigan real estate market comes back?

Well let's look at the past to predict the future.  Right now we are back to 1990 home prices.  So let's think about this.  From 1990 to 2004 it took 14 years for the market to get to it's highs.  It was a booming real estate market.

Detroit's economy was rolling along.  Homes were being built by the hundreds each year.  The Big 3 were doing good.  Unemployment numbers were low.  Interest rates were on the down ward trend.  Banking regulations were extremely lax.  Just about anybody could buy a house even without a down payment or without income or asset documentation.  Mortgage interest rates even reached a 40 year low.  All of these factors hepled drive the real estate market.

Many of those factors are not present in our current market. 

• the big three are struggling
• Metro Detroit's unemployment numbers are at 20 year high
• Banking regulations are tougher than they have been in 10 years.
• Home building is at a standstill

What I am trying to say is that is going to take at least 15 years plus for the Southeastern Michigan real estate market to come back to its highs.  So buckle down for the long haul if you are upside down in your mortgage.  If you want to move, then put your house up for sale now.  Waiting won't make a difference.  I myself don't see any major changes in the Southeastern Michigan real estate market for at least 7 to 10 years.

It doesn't matter whether it is Farmington Hills real estate, Redford real estate, or Canton Michigan real estate it is going to take time.  So whatever you do start living your life and don't depend on the real estate market to come back.  Make your decisions based on the market not coming back anytime soon. 

More Southeastern Michigan home seller tips

Novi Michigan Real Estate For Sale and Novi homes for sale Right now there are 223 Novi homes for sale that have been on the market an average of 217 days.  Out of those 223 homes there are 9 Novi foreclosures and 53 short sales.  Right now there are not many foreclosures for sale in Novi.  The deals may be in short sales.  Just remember that short sales take months and months to close.  The soonest a short sale will take to close is about 45 days.  Most of these Novi short sales have been on the market an average of 173 days.  It's not because they are bad deals.  It is because many Metro Detroit home buyers don't want to deal with short sales. Homes that are not short sales or foreclosures can be good deals too.  But take each Novi home listingat one time.  Look at the recent sold home prices in the neighborhood and in Novi when you find a home you like.  You need to know what homes have sold for in the last 90 days.  The Novi market and the Metro Detroit real estate market has changed in the last 90 days.  The Metro Detroit real estate market has gotten hot since the end of summer.  But who knows it may cool off over the winter.     If you have lots of patience then a short sale home maybe something you might want to look into.

More Novi real estate information

• Novi subdivisions
• City of Novi Data
• Novi real estate information
• Metro Detroit relocation information

This post is about religion so be prepared that my views may not match yours.  That's what is great about the U.S.  We are allowed to practice whatever religion we want without fear of persecution.

I writing about the latest incident of the Nigerian Islamic extremist trying to blow up a plane here in Metro Detroit.  I was raised Catholic and I have seen so many extreme views even in the Christian religion.  My basic premise is that: I don't believe any God whether it is Muslim, Jewish, Hindu, Christian, or Buddhist would want to kill others because they don't believe in their religion.

In my opinion it just goes against the grand scheme of things.  Hatred and killing isn't what any God wants.  I just believe that all God's want us to be better people.  To help others, to make the world a little better place.  Throughout the centuries their has been religious persecution.  The Crusades, The Holocaust are just two.  Saddam Hussein tried to kill off as many Shiites as possible.  It goes on in many countries and cultures across the country.  I just can't believe God would want us to do that.

I have seen in the Catholic religion too.  My brother in law's mother disowned her daughter because she married a Jewish guy.  They never really talked for 30 years.  Sad.  Another mother caused such a fuss in her Catholic family because the son wasn't being married in the Catholic Church.  The mother son relationship is strained.  All because of religious beliefs that the son or daughter was committing a sin against the religion.  I understand the reasoning but is it worth losing the love of your kids and being narrow minded about "our" religion. 

It's great to believe our religion is the "right" one.  That all others aren't following the right and true God.  That ours is the best.  Sadly I believe many organized religions did that to force conversion and to keep believers.  The killing and hatred of other religions have become a by product of not being part of the "RIGHT" religion.  I just can't believe any God would want people to die, to hate, to maim others. 

KILLING PEOPLE IN THE NAME OF RELIGION IS WRONG!!!!  It doesn't matter if you are killing an abortion doctor, or a Muslim killing an American, or a Nazi killing a black man or Jew.  There is no God that would want that.  At least no God that I want to be a follower of.                                                             

 This guy from Nigeria would have killed women, children, Muslims and Americans all in the name of Allah.  I don't think Allah would want that.  I think here in the U.S. we have it right.  You get to practice your religion the way you want.  But I believe THAT NO RELIGION OR FOLLOWERS HAVE THE RIGHT TO FORCE US TO FOLLOW THEIR RELIGION HERE IN THE United States.  If you want to do that move back to the country you came from. 

So I ask each of you 

• believe in your religion
• spread your faith to others that are receptive
• don't try to jam your beliefs down other people's throats
• Help others
• try to do one good deed a day 
• don't hate others because they don't believe like you or act like you
• give money and time to help make the world a little better place
• don't destroy your family because your kids don't believe exactly like you do
• try to become a little better person each day
• try to change the world thru legal means not illegal means
• don't kill the non believers

Just my thoughts for the day.  Because..... instead of celebrating Christmas we would have been mourning the death of those people on the flight to Detroit. May we have peace between the religions.

Here is the latest Livonia real estate update:  currently there are 18 Livonia homes for sale (single family) under $50,000 and 19 Livonia condos priced under $50,000.  14 of them are short sales, 7 of them are Livonia foreclosures, and  are relocation sales.  The single family homes are selling quicker than the condos only because many of the condos are short sales.

***Short sales are where the homeowner is trying to sell the home or condo for less than what is owed on the mortgage.  The bank has to agree with it.  A short sale can take anywhere from 45 days to 6 months to complete.  The average time is 4 months.  Sometimes the bank does not agree to the short sale.  So you can put in an offer on a short sale and after 4 months they can say no.                       

I look at homes or condos priced in the $35,000 price range as a steal.  I have sold a couple of Livonia condos in the last few years in the $30 -35,000 price range.  Both people paid cash for them.  How could they go wrong.  Eventually the metro Detroit real estate market will come back.

Livonia homes and condos I believe will hold their value for many years to come.  In fact I believe some of these Livonia condos will increase in value.  But what I think is great is that Livonia has a low crime rate, good school system, and easy access to freeways, shopping, and the airport.

All of these factors make a Livonia a great Metro Detroit relocation location.  But even for those people with limited funds I would recommend Livonia real estate to.  Safety, closeness to major employers, and place that should increase in value in the years to come.

I myself live in Livonia and love the city and the local area.  So if you are looking to move to the Detroit suburbs the western suburbs are a great place to live.  There are very few cities in the western suburbs that I would not recommend.

One of the investment company officials in the article says Detroit is an investors dream.  I myself think it will become a nightmare for them and the City of Detroit.  Here is my predicition.  I believe we will see a fair percentage of these homes coming back up for sale in the next four years once the investors become disenchanted over:

•  Detroit's high taxes for investment properties
•  The inability to reduce the investment property taxes easily
•  Detroit's renter population and the ability to collect rent
•  Detroit's theft problem of vacant rental homes. Losses of furnaces, copper plumbing, radiators, and hot water heaters will rack up unexpected costs.
• Management company fees and poor management companies.
• Lack of demand of for the homes because of diminishing prospective renters.

I think after a few years investors will bail out of their Detroit investments creating a problem for the City of Detroit.  I think some investors will just walk away from the properties adding to the City of Detroit's problems.  If they have no mortgage the City will lose money.  They won't be able to collect the back taxes.  They won't be able to collect past water bills.  Some of them will become uninhabitable, some will have to be demolished.

The ones that have mortgages on them will be foreclosed on.  The people that have $45,000 invested in them won't be able to sell them.  They are underwater!  So what do they do with them.  Do they look for another "overseas" or "out of state" investor to overpay for the home.  Detroit properties won't rise in value that quick because. 

•  Banks not wanting to loan small amounts under $25,000.
•  Of new appraisal rules and HVCC (These limit how fast home values rise)
•  The demand
•  The foreclosure process leaning toward cash buyers over mortgages even if they are lower priced.

What I don't know is how many investors will give up or how soon?  That is the problem of the future for the City of Detroit.

These are the many reasons why I don't want take "out of Country investors" or "out of state investors" money.  My professional ethics won't let me just take somebody for a ride just to make a buck.  The media has people around the world hyped that there are easy pickings here in Detroit.   I hate to tell you but it's not as rosey as you think.  So before you invest research it well.

                                         From a real estate agent at ground level 

Metro Detroit real estate investment information

 Investing in Detroit real estate isn't for beginners. Part I

Investing in Detroit real estate isn't for beginners. Part II

Investing in Detroit real estate isn't for beginners. Part III

Investing in Detroit real estate isn't for beginners. Part IV

Again I say investing in Detroit if you are an out of state or out of country investor is crazy.  You might as well write a check to a charity and feel good about it.  You will get a better return on your money than investing in Detroit real estate.

So many investors forget about the maintenance costs, the higher taxes for investment properties, the management company fees.  You see I have never been a fan of companies that find investments for people.  I was a stock broker for E.F. Hutton many years ago.  They sold limited partnerships for people promising good returns.  Very few of them ever made money for the investors.

The people that made money on the limited partnerships is the people who put them together and the people that sold them.  Most people who bought them lost money or made very little.  I think investing in Detroit real estate is the same way.  Sure the management company and the company that finds the investors will make the money.

And you do have a chance to make money too.  I won't say that you won't make any money.  It is possible but it is very risky.

Add to the decaying climate of Metro Detroit you have problems.  Mayor Bing and many business leaders are trying to save Detroit.  But I think the City of Detroit is going to be an example of the rest of the nation of what not to do.  I myself think it is too little to late for the City of Detroit.

There are many plans to rebuild the city but the city has to consolidate.  It can't survive unless the city can provide services to it's residents.  With a slowly diminishing population, falling property values, and lower tax base it is going to be hard to resurrect Detroit.   It has to become smaller to survive.  It has to reduce it's overhead to a smaller area to take care off.

The city cannot go on trying to take care of such a large area with a smaller budget.  Something has to give.  Detroit has to draw all races, all cultures, all income levels to live in the city.  Sadly some of the immigrant population is moving out of the city.  People have to want to move into the city, not out of.  Unless there is major investment, major redevelopment, and a new top notch private school Detroit can't rise from the ashes.   But I hope they can rebuild the city.  It will be a shame to see it die.

Metro Detroit real estate investment information

 Investing in Detroit real estate isn't for beginners. Part I

Investing in Detroit real estate isn't for beginners. Part II

Investing in Detroit real estate isn't for beginners. Part III

 Kevin was right when he wrote "Once fixed up, the houses are usually eligible for the U.S. Department of Housing and Urban Development's Section 8 voucher program, which subsidies rent for struggling families."   BUT there are only so many vouchers.  Only so many people that get them.  So every landlord is going after the same potential pool of renters.

Back in 2000 only 54.9% of Detroit homes were owner occupied.  I can tell you that has dramatically changed in the last 9 years.  Much of Detroit is owned by real estate investors.  Back in 2000 26% of the population is below the poverty level.  That too has grown.  There are more people that can't make rent payments.  Being a Detroit landlord and collecting your rent isn't always easy.

Remember you need to cash flow.  And you will when you buy a home in Detroit for $10,000 - $20,000 hopefully. 

Let's do a scenario.  Let's say property taxes are $350 a month.  Detroit Homeowners Insurance is about a $100 a month.  So your total outlay is going to be about $450 a month if you don't have a mortgage.  Let's say you get $800 a month in Detroit.  Which is an average price. 

$800 a month times 12 months is $9600.  But here are some of the potential issues.

1.  Will the property be rented all the time?  Banks use the 75% rule.  They conservatively figure most rental properties are only rented 75% of the time.  Let's be gutsy and say the house gets rented 91% of the time.  Only missing 1 month rent a year. So that means you bring in $8640 a year and your basic expenses are $5400 a year.  That's $3200 a year.  A 7% return on your money if you are not borrowing any of the money.  That's not bad.

2.  But now you have figure the "OTHER EXPENSES" 

• like unpaid water bills your tenants leave behind
• or cost of maintenance (electrical repairs, plumbing repairs)
• or cost of replacing the furnace, or water heater when they get stolen
• the cost of City bills when your renters leave and leave junk cars or other people dump garbage on the property.
• The cost of fixing up the home each time your tenants move out
• The 7 - 15% management fees for managing the property
• Major repair cost such as replacing the roof or furnace.

But's let's take a few of those costs.  So if you get $8640 a year in rent then you would owe the management company $864 dollars.  Then I would say the average minimum maintenance costs per year would be $1000.  Now after your costs you are only clearing $1376 a year.  $114 a month profit!  3% return on your money without a mortgage. 

Not so good.  Now that is based on renting the house 11 months a year, 10% management costs, and a $1000 a year in maintenance costs.  Now remember this is just an example.  It is very possible to make money being a landlord in the city of Detroit.  Many people have succeeded being landlords in the City and many have failed.  Don't let me tell you can't make money.  It is just easier if you are in state and hands on.

Being out of state or out of country will make it much harder to be a successful Detroit landlord.  Just my opinion. 

Metro Detroit real estate investment information

 Investing in Detroit real estate isn't for beginners. Part I

Investing in Detroit real estate isn't for beginners. Part II

This is an response to a contact from Kevin Brass who wrote about the UK investors in the Detroit Housing Market

It is easy for investors 1/3 of the world away to think they are getting a great investment.  But I am going over a few of the points the UK investment company made.

1.)  First point.  They said for about $45,000 you can have a great home in Detroit after fixing it up.  But look at the box below.  Here is what has happened in Detroit Real estate in the last 360 days.

So if the average sold price was $10,715 then why in your right mind would you put $45,000 into a home.  Are you crazy?  Do you think that is a wise decision? 

93% of the homes sold under $25,000.  So why would you but more money into a home than you can sell it for.  If you use the rule of 72 for figuring out how long it will take for your investment to get to $45,000.  14 years.  

That is why I refuse to get involved.  I can't justify an investment like that.  I can't.  I wouldn't put my money, my friends money, or my families money into an investment like that.  Would you?

Metro Detroit real estate investment information

 Investing in Detroit real estate isn't for beginners. Part I

Kevin Brass is a writer who sent me a link to an article he wrote about UK investors in the Detroit Housing Market.

Sadly as a real estate right here in Detroit I have to laugh or cry for those UK investors.  I made a conscious decision last year not to work with out of state or out of country investors.  Yes I turned down money.  I turned down a lot of money.  I could have sold a lot of houses to out of country investors.

But I would have become a slick salesmen.  A person selling a product they don't believe in.  A swamp land real estate salesmen.  There were a lot of them back in the early 20th century in Florida.  Sure eventually the property became worth something but decades after naive investors bought into it.

Here is why I believe investing in Metro Detroit properties is a very risky investment.

1.)   There is no quality school system in the City of Detroit.  Last graduation rate I think I heard was about 25%.  But don't quote me exactly on that.  Without a quality school system it becomes a deterrent to live in the City of Detroit

2.)  If a investment property is empty of tenants it is usually stripped of anything valuable.  Furnaces, hot water heaters, copper plumbing, doors.  (Why they even had video of a Detroit fireman taking a door off a house and putting it on a firetruck)  So anytime a property is vacant it has a chance of being vandalized.

3.)  There are very high homeowner insurance costs because of the high crime rates.  Detroit has the highest murder, theft, assault, arson rate in the state of Michigan.  It has been the murder capital of the US many times.  They have featured Detroit for all the arson's of the vacant homes.

4.)  Detroit is a city financially struggling.  The infrastructure is too large for the tax base.  There have been too many residents leaving the city thus reducing the tax base.  Add to the huge reduction of property taxes income because of the home values dropping you have a big problem in the making.

5.)  Many seasoned local investors have given up on the City of Detroit.  So if local investors can make a good living out of it why do you think a person thousands of miles away can.   I know a lot of Metro Detroit investors.  The ones that have property in Detroit are crying the blues.

This is part 1 on my short series on investing in Detroit.  

Holiday funnies

The Supreme Court has ruled that they cannot have a nativity scene in Washington, D.C.  This wasn't for any religious reasons.  They couldn't find three wise men and a virgin.  ~Jay Leno

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As a little girl climbed onto Santa's lap, Santa asked the usual, "And what would you like for Christmas?"
The child stared at him open mouthed and horrified for a minute, then gasped: "Didn't you get my E-mail?"

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In a small Southern town there was a "Nativity Scene" that showed great skill and talent had gone into creating it. One small feature  bothered me. The three wise men were wearing firemen's helmets.  Totally unable to come up with a reason or explanation, I left.

At a "Quick Stop" on the edge of town, I asked the lady behind the counter about the helmets. She exploded into a rage, yelling at me, "You damn Yankees never do read the Bible!" I assured her that I did, but simply couldn't recall anything about firemen in the Bible. She jerked her Bible from behind the counter and ruffled through some pages, and finally jabbed her finger at a passage. Sticking it in my face she said "See, it says right here, The three wise man came from afar."

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Just before Christmas, there was an honest politician, a kind lawyer and Santa Claus travelling in a elavator of a very expensive hotel. Just before the doors opened they all noticed a $100 bill lying on the floor. Which one picked it up??

Santa of course, the other two don't exist!

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On Christmas morning a woman told her husband, "I just dreamed that you gave me a beautiful diamond necklace.

What do you think it means?"

"You'll know tonight," he said.

That evening just before opening presents, the husband came home with a small package and gave it to his wife.

Delighted, she opened it only to find a book entitled "The Meaning of Dreams."

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Danny had recently passed his driving test and decided to ask his clergyman father if there was any chance of him getting a car for Christmas, which was yet some months away. 'Okay.' said his father 'I tell you what I'll do. If you can get your 'A' level grades up to 'A's and 'B's, study your bible and get your hair cut, I'll consider the matter very seriously.'

A couple of months later Danny went back to his father who said 'I'm really impressed by your commitment to your studies. Your grades are excellent and the work you have put into your bible studies is very encouraging. However, I have to say I'm very disappointed that you haven't had your hair cut yet.

Danny was a smart young man who was never lost for an answer. 'Look dad. In the course of my bible studies I've noticed in the illustrations that Moses, John the Baptist, Samson and even Jesus had long hair.' 'Yes. I'm aware of that...' replied his father '... but did you also notice they walked wherever they went?'

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Merry Christmas to all!!!!