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Every time I think things are tough where I live with the recession and finances, I think of Detroit. Detroit was once the 4th largest city in the United States. With the losses of the auto industry, Detroit has been hit hard.
The city of Detroit is 300 million dollars short right now. The schools have no money. The crime rate is crazy high. The unemployment rate in Detroit is 28.9%. To put that into some kind of strange perspective, after Katrina hit New Orleans, three years later, New Orleans’ unemployment was as high as 11%. Okay, only 11% compared to Detroit’s 28.9%.
If you search for Detroit online, you will find startling pictures of vacant homes and neighborhoods, weeds and garbage spread throughout those vacant homes. Not from a hurricane, earthquake, flood or tornado. But no one can afford to live in the homes in Detroit in spite of the price of the homes, which will make you shake your head.
The median home price in Detroit is startling. According to the Chicago Tribune, the median (or average) price of a home in Detroit is $7,500. $7,500. I had to say it twice so you wouldn’t think I said $75,000 or $750,000. Here’s a startling fact.
AIG, in the 4th quarter, lost over $7,500 every single second of every day. AIG lost over a house a second. Detroit is trying to pull back. There are classes being taught to young men and women teaching them to dress for success. Men wear suits, they are told, if you want to be successful in business.
Detroit’s churches are setting up service projects to help save Detroit, cleaning, redeveloping and bonding. Maybe GM will bounce back? Groups are trying to bring in new business. There are some trying to bring in a major garment manufacturer to replace the jobs lost in the auto business. If you think of it, as bad as Detroit is, if you got a 30 year mortgage on $7,500, how high could the payment be?
What are the chances if you bought and financed a house right now in Detroit that in the course of the terms of your home loan, the job market would turn around and you’d have a home with payment of, oh, say $50 per month, and you would have a great job on top of it in an economy that had bounced back?
Here’s another major problem. Detroit has the highest murder rate in the nation. And 7 out of those 10 murders goes unsolved because the city is $300 million in debt and certainly can’t afford to spend the money it takes to solve the murders. So the murders and crime continues. I don’t know about you, but I’ll take my chances in the city I am in and let someone else gamble with their lives on the $7,500 home.
