It's been said that the three most important things about real estate are location, location, location. But a look at the 10 most-searched homes nationwide on Realtor.com last week reveals as surprise: five of the top 10 homes are in economically depressed Detroit. A sixth home on the list sits in a suburb of the Motor City.
"Folks are either looking for incredible value or real estate investments," says Julie Reynolds, a spokesman forMove Inc, the company that operates Realtor.com. "The economy is still in recovery and people are just looking for good value right now."
For a slideshow of the Top 10 most searched homes click here.
Depressed home prices are likely behind the surge in interest in Detroit real estate, say observers. The average sale price of a home during the first nine months of the year was a paltry $12,063 - down from $73,000 just three years earlier. In September, the median price of a Detroit single-family home hovered just above $7,000, according the National Association of Realtors.
Eye-popping numbers like that have unleashed a cavalcade of intrepid real estate investors who are trying to capitalize on the housing meltdown by buying astoundingly cheap homes in foreclosure. Foreclosed properties in the city can be had for as little as a few hundred dollars, say local brokers. Well-maintained Georgian and English Tudor-style properties, in better neighborhoods, cost $10,000 to $30,000.
"The Detroit metropolitan area offers everyone from first time-home buyers to investors terrific deals," says Bob Bellack, chairman of home auction firm Zetabid. The company is planning to auction about 155 bank-owned properties in Troy, Mich., just north of Detroit, Nov. 14. "We're expecting strong interest because of the affordability and upside in these properties."
The Realtor.com survey, compiled each week, includes homes priced within 20 percent of the national median list price of $215,000. The list reveals an interesting comparison of what you can buy in different locations for the same amount of money.
Property Hot Spots Turn Sour
For instance, a four-bedroom, 2,005-square-foot residence in Canton Township, Mich., was the most searched home on the list last week. Its price tag: $219,000. But a three-bedroom, two-bathroom home measuring just 1,464-square-foot in Los Angeles came in second on the list. Its price tag: $248,000.
Not surprisingly, the list is loaded with properties in former real estate hot spots that have now turned sour. A four-bedroom, four-bathroom home in Las Vegas was third on the list at $185,000. In Miramar, Fla., a foreclosed home with four bedrooms held the number seven slot with a price of $199,900. A home in Holly Springs, North Carolina near Raleigh, made the list at number eight at $183,000.
"These homes were probably worth twice that amount just a few years ago," says real estate economist Lewis Goodkin.
Realtor.com also released the top 10 most searched cities for last week with Las Vegas, San Antonio, and Orlando, Fla., topping the list. Detroit registered at number four.
In 2006 so-called "distressed" property -- bank-owned or sold cheap by the homeowner to avoid foreclosure -- accounted for less than 10 percent of the U.S. market. Today, the category accounts for nearly half of all sales in the U.S., according to the National Association of Realtors.
In Detroit, where boarded-up homes plague one block after another, buying up foreclosed or distressed property has grown into a cottage industry.
One-third of the homes listed for sale in Detroit are bank-owned foreclosures, according to Realcomp Inc., a firm that tracks real estate transactions in southeast Michigan.
Roughly 80 percent of houses sold in the city are being bought by investors, some of whom are coming from as far away as Hong Kong and Hawaii in a bid to make their fortune buying foreclosed homes in bulk, according to Realcomp.
These houses are especially attractive to foreign investors, in part, because the weak dollar makes American real estate a bargain for investors paying with euros or yen.
Jeremy Burgess caters to the new breed of eager real estate prospectors who are snapping up homes at absurdly low prices. His company, Urban Detroit Wholesalers , helps clients identify promising neighborhoods to purchase homes to renovate and then rent or resell.
Buying Foreclosed Property in Detroit
In business since 2007, Burgess and his partner started out by buying foreclosed houses, fixing them up and then selling for a profit. Many homes are sold to investors for around $38,000 after they have been renovated, Burgess says. These days, he's doing a brisk business.
"Right now, we have more people to buy houses than houses," says the 29-year-old from Washington state. He estimates that prices in metro Detroit - mainly within the city limits and nearby suburbs - are so low that investors from more expensive markets like California and Nevada feel they can grab bargains.
"Detroit used to be kind of a secret for real estate investing," he says. "It's becoming less and less of a secret now."
Of course, property experts warn that it could take years before the real estate market in Detroit rebounds. The city has one of the highest crime rates in the country, with gun violence seeping into almost every area of the Motor City. The school system is a shambles and the employment outlook isn't any brighter.
The automotive industry, long an employment engine for Detroit, has been hammered by losses and job cuts. Detroit-Warren-Livonia, Mich., had the highest unemployment rate of any large metro area in September, at over 17 percent, according to the Bureau of Labor Statistics.
"It could realistically take years before we see the city return to something reflecting growth," adds real estate economist Lew Goodkin, who says many of the so-called bargain homes for sale will need lots of work. "Investors hoping for a quick recovery may be disappointed."