The $100 House: 'Wonderful and Sad'

March 20, 2009— -- Sarah Wagner and Jon Brumit closed a real estate deal today on a home they bought for $100, a sale price even lower than the closing costs.

Both artists in their mid-30s with limited incomes, they are taking a chance on moving from Chicago to a declining, working-class neighborhood of single-family homes, mostly built in the 1920s, in Hamtramck, Mich., a city on the eastern edge of Detroit.

"People feel very inclined to tell us, 'That's very dangerous. I don't know why you'd do that,'" Brumit said.

Their reasons are more than economic. They were recruited to the neighborhood by another pair of artists, Mitch Cope, 35, and Gina Reichert, 34, whose lives were already bound up in the risks of living there. For better or worse, Cope and Reichert saw a flicker of hope amid the ruins.

New statistics released Thursday show that Detroit's unemployment rate, already the highest of any large American city, rose to 22 percent from 17 percent between November and January. During the worst days of the 1930s Depression, national unemployment reached 25 percent.

More than 11,000 homes have been foreclosed in Detroit. The neighborhood where Brumit and Wagner are moving, and where Cope and Reichert already live, is one of the ground zeroes of the foreclosure crisis. It was once a Polish enclave, but is now a mixed neighborhood of Polish, African-American and Bangladeshi residents.

Three years ago, Cope and Reichert bought a former Polish deli that they converted to an art studio and home. They also run a storefront gallery called Design 99 not far from where they live.

When the foreclosure crisis hit, "a lot of houses started going empty," Cope said. "And that's when we became interested in doing something."

One reason home prices have plummeted so dramatically is that banks and mortgage holders simply want to clear the books of properties that generate tax obligations, maintenance and code violation fees. In the stock market, it's called "capitulation."

Homeowners Staking Their Ground

Thieves have stripped abandoned homes of wiring and other valuable scrap items. Some homes have been burned by arsonists or squatters.

Cope's and Reichert's concerns struck close to home when the house next door to them went vacant. Rather than leaving it as a magnet for vandals, they explored buying the house themselves and found it listed in a foreclosure auction for a price that seemed impossibly low: $500.

"The starting bid on everything in the auction was $500," Reichert said. "And, so basically, no one bid against us."

Cope said, "We liked the house because it was smaller, would be more manageable, and was also in really good shape."

Cope runs into resistance when he tries to chase scrap thieves and vandals away from vacant properties.

"There were these teenage kids that threatened to burn our house down, and I just looked at them," he said. "I go, 'What's that going to do? You're going to burn it down. I'll still be here.'"

Even with the crime, blight and vandalism, Cope and Reichert don't want to leave.

"There's crime everywhere," Cope said. "So, for me, it was stake your ground and just learn to deal with it and try to change it somehow."

In staking their ground, Cope and Reichert bought another house for $1,900, money borrowed from their parents. They hope to convert it to a self-sufficient neighborhood power center with solar and wind technology.

Cope has hired neighborhood teenagers to help do fix-up work, including a pink paint job on a fence that fronted an abandoned property. He and other neighbors have organized to pick up and haul away piles of trash.

As for any hopes to benefit financially from their commitment to the neighborhood, Reichert said, "It would be nice not to have to sweat it out every month. But no, [profit] is not our motivation."

Cope said, "Money isn't on my radar. We're going about it all wrong if we're trying to make a profit."

$100 House: 'This Is It'

They're more interested in recruiting other artists to live in their community. They sold the house they bought for $500 to another pair of artists, Zeb Smith and Corine Vermeulen-Smith. The price was $549.99.

Cope and Reichert also scouted properties for friends. That's how they found the house that sold for $100, a price newcomers Wagner and Brumit found irresistible.

Reichert e-mailed a photo of the house with a large "$100" label. "I said, 'OK, this is it,'" Brumit said. "Let's do it."

By most standards, the interior of the house is appalling. Neighbors said it had been vacant for a couple of years after its residents had abandoned it. Attempts to sell it failed, and it was taken off the market.

A fire had been set in a corner of the front room, causing widespread smoke damage throughout the lower floor of the house, which has about 1,500 square feet of space. The walls were blackened. The wiring was stripped. Firefighters had knocked a hole in the roof.

But Wagner and Brumit say the shell of the home is structurally sound, and they plan to create studio space in the front of the house by knocking down one of the peeling, smoke-damaged walls.

They see the house as a kind of blank canvas on which they can create workspaces and a home. They cannot afford to hire others to do the work, and plan to do most of the labor themselves.

If they succeed, they'll have a home that is debt-free and rent-free, with property taxes amounting to around $1,000 a year.

"This house was worth $70,000 two years ago," Wagner said, shaking her head. "I mean, this is both wonderful and incredibly sad, all at the same time."

"This is what we have to work with," Brumit said, "to try to build something new."

Brumit, who has performed and recorded as a musician and producer, also plans to produce a radio project in the neighborhood this summer.

Building a Better Future

Toby Barlow, a Detroit novelist ("Sharp Teeth") and advertising executive who knows Cope and Reichert, said they and their friends are pioneers.

"It's not going to be a place for the Ozzie and Harriets to come resettle," Barlow said. "It's going to be a great place for people who want to try something different. ... I don't think anybody is looking to this city as a place for solutions; and what's interesting about that is that because of the neglect, solutions are actually popping up."

"In my perspective, that's the American dream," Cope said. "Following your heart and going for it, building something that you think is going to create something for the future."