Thursday, January 23, 2014

Calling All Clueless Speculators


This is how the housing speculators help destroy Flint. Check out this property listing on eBay for 2322 Delmar Avenue in Civic Park, not far from Haskell Community Center. I spent a lot of time on this street as a kid and more recently while house hunting and writing Teardown: Memoir of a Vanishing City. The New York owner describes it as a “great investment property!” It’s not. Delmar is one of the most abandoned and desolate streets in Civic Park these days. The setting is described as “suburban.” Also not true. The Zillow estimate is a testament to the flaws of online housing valuations and deceptive advertising: $40,000. Not even close. The condition: “Needs some repair.” That’s technically accurate but doesn’t reveal that the house has probably been stripped clean by scrappers. Some clueless “investor” looking to make a quick buck could buy this house without knowing just how troubled the neighborhood really is right now. Then walk away from it down the line. The county will be left to deal with it at taxpayer expense.

UPDATE: Here's the response I got from anwarproperties regarding this property:
"Thank you for your interest in the property. Please do not mind the wordings of my answer, these are investment properties which are going to sell in few hundred $, so this is buyer's responsibility to complete all due diligence needed to determine the condition or taxes. We are buying in bulk 15-20 properties and selling as is, and giving the information we have got from our selling investors or banks because we never visited these properties.

"I never been there, these investment properties are available for a limited time. As soon the economy in that area will get better who will sell these houses in these prices?. So the wise are collecting these lottery tickets now."
Great to know that Flint houses are nothing more than lottery tickets to these speculators, something to just throw away if they don't get lucky. 




26 comments:

  1. Really enjoyed your book, Gordon. The first house I ever lived in was at 2333 Delmar Avenue, but we were only there until I was two years old, at which point my family moved to Flushing (in 1991). I have heard over and over how cool a place Civic Park used to be.

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    1. Glad you liked the book, Matthew. My family left Civic Park in 1986, so we beat you by a few years.

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    2. Matthew - I lived directly a cross the street from the house in the photo and two doors to the south from your first home. My parents moved in 1990. I am not sure if you're the son of Jim or Paul. Jim and I were best friends when we were young. We played a lot of baseball and football at Haskell and Bassett parks. Jim even chipped a tooth of mine playing floor hockey in the basement of your great grandparents home; he was always a tough hockey player. The food cellar in the basement is where went to cool down on a hot day. The tragedy of this is that your great grandfather maintained the most meticulous yard in the area. His front lawn was like a putting green and he used a non-motorized push mower in which the cutting blades were sharp as razors - a clean cut. They also had Concord grapes vines that produced the best grapes each year. I haven't lived in Flint in over 30 years but I tell people it was actually a terrific place to grow up. Vince Pastue

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    3. Really enjoyed reading that, Vince. Jim is my dad. I just told him about your post. He told me that you guys went to your first Tiger game together in 1966. By the way, he still has that push mower in his shed.

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  2. Clueless? Who woulda guessed the Lower East Side would become posh? Civic Park might be the North Beach of 2045. Buy low, sell high.

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    1. You're joking, right? Compare the economic activity of 1970s New York at its lowest economic point to today's Flint. NY was running a big budget deficit, but its economic activity was stratospheric compared to Vehicle City right now.

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    2. Well, the last I heard a price quoted in History Class, Manhattan was worth about $24.00. So the bid for that one house in Civic Park is more than four times that. But seriously, I don't think there's a fair comparison possible. I really don't see what's so wonderful about NYC. They have to bring in everything from outside. What would happen if access were closed off? At least someone in Flint probably has a henhouse, and there was a rabbit farm in Roger and Me for food or pets.

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    3. Big Apple, Little PondJanuary 25, 2014 at 12:07 PM

      You really don't see what's so wonderful about NYC? How about art, culture, music, theater, fashion, business... basically everything besides activities favored by rednecks.

      As far as NYC becoming closed off like Stalingrad... c'mon dude.

      Rabbit shack was in Burton.

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    4. Almost all of those things you can live without. Besides, Art, Music, Theater, Fashion, etc., can be found in Michigan, if not in Flint, then within an hour's drive or so. The last I checked, there was still a Flint Symphony Orchestra. And from personal experience, I do not believe that the "best" are necessarily in New York. There are a lot of people there coasting on their family legacy, not on their own talent and ability, and who would otherwise be lost in the hundreds of other people with equal talent and ability. It's easy to dismiss other interests as "favored by rednecks". Could you name a few of those? I've never been to a tractor pull or drag raceway, but I still think it's kind of arrogant to dismiss other peoples' interests as "redneck". Many of us here in Michigan are so busy complying with regulations and trying to make a living that we don't have time for it anyway, be it tractor pulls or Art Exhibits.

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  3. It's hard not to notice that the person who responded to your queries didn't have a great grasp of the English language. Could this be a Chinese "investor"? Sigh...

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    1. From the company name, the owner of "Anwarproperties" likely is of Middle Eastern ancestry. But so what? We're a nation of immigrants. Lots of immigrants have climbed the economic ladder over the years by getting a little money together, buying low and selling a bit higher.

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    2. So let's place the economic advancement of money grubbing out-of-state speculators over the needs of people actually living in Flint? Why? And I don't care if they're white, black, or Middle Eastern. Get your priorities straight. Besides, you have no idea what their economic status is in the first place. The response from the owner indicates they are buying in bulk. They probably have more money than you think. Let's stop pretending that people churning worthless property that should be torn down is somehow noble or "American" in some way.

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    3. What's wrong with Chinese investors? Xenophobia?

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    4. I'd say the Chinese speculators are no better or worse than the other speculators who place making money over building community and are helping to destroy Flint. Although you could argue that at least American speculators are funneling their profits back into the U.S. rather than exporting it abroad. But I don't think either variety is helping Flint. I think Jan's comment was simply an acknowledgement of the volume of Chinese speculators versus other speculators. Stop implying it was something more than that.

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    5. Here's an interesting Reuters piece on speculation in U.S. markets.

      http://www.huffingtonpost.com/2013/07/03/cheap-detroit-houses_n_3538213.html

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  4. If you don't want bottom-feeding speculative investment, you have to change the rules to make it uneconomic.

    If you're going to do that via property taxation, a Michigan constitutional amendment would be needed.

    For instance, constitutionally allow a surcharge, starting at a low level and increasing each year, on parcels that are unoccupied and not contiguous, or linked through other same-owner parcels, to a same-owner occupied parcel.

    What would be the point, though? The bottom feeders would leave and the Land Bank would get the parcels sooner instead of later. What then? There still wouldn't be a market for them. At present only bottom feeders and possibly their foolish customers buy them. In the proposed scenario, no one would buy them.

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    1. The sooner the land bank gets these worthless properties the better. There's no benefit to Flint by having a series of "owners" who've never set foot in Flint endlessly flipping property that no one will ever want to live in. The houses would cost vastly more to bring up to code than they'll ever be worth in our lifetimes. No actual people with a desire to live in Flint will ever buy them. In the meantime, they are crime incubators that hurt the city and the real residents still left living nearby. Go talk to the real residents left in Civic Park and ask them if they would rather have the houses endlessly flipped by speculators until they are burned down, or if they'd rather have them demo'd as soon as possible.

      The constitutional amendment would never pass the tea party controlled Michigan legislature. They place someone making money over what's best for a community.

      The land bank might be slow because it is underfunded, but it's faster than the endless churn of speculation.

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    2. The land bank only gets them when someone stops paying the property tax on them. But I suppose a speculator who walks away would stop paying property taxes as well, so it might not really matter much. There is an argument to be made that the endless flipping just prolongs the inevitable, which is a demo. But that doesn't apply to a historic district like Civic Park, although Flint is attempting to change that so LB properties can be demo'd.

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    3. This got me wondering about other governmental efforts to thwart speculation besides land banks. Anyone know of anything out there?

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    4. Both Ontario and Vermont apply a special tax to land transactions, paid by the seller, in order to limit speculation.

      In Vermont's case, the law applies to land held for less than six years, and after various amendments excludes parcels where the buyer certifies that he or she will quickly construct a primary residence. Vermont of course is pretty much a non-urban state, and their purpose is to preserve large open-space parcels and limit their sale for conversion into subdivisions for which there is insufficient demand, that then economically fail.

      http://digitalcommons.law.wustl.edu/cgi/viewcontent.cgi?article=1481&context=urbanlaw

      Obviously our purpose would be different...we'd want to tax the sale of a parcel of any size if the buyer doesn't certify that a certificate of occupancy will be obtained, unless the parcel is contiguous with other same-owner property that is contiguous with owner-occupied property.

      I haven't found an example of that exact approach yet.

      There is a sizeable body of academic and theoretical writings on the nature of land speculation, as to whether it is economically beneficial or harmful.

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  5. This article is not only brilliant, but I am reading it for the first time in 2015 and its still true. I thought about buying a home in Flint Michigan and living in it while I flipped it. I see on Zillow several homes on one street for sale and also see the Zillow "estimate" of the property being 30k. The last time the property was purchased was one year ago (For 37k) and today it is back on the market for 8k?? I am no math genius but SERIOUSLY? Gosh, I would think ANYONE could afford a home that costs less than any brand new car? So why are they still on the market sitting empty? Still being advertised as being ready to move in? At a 30k loss per year 8k has nowhere to go when its already practically being given away. That is because no one wants to live in the area. The police response to a break in is 18 hours (We timed it after calling 911 at my Sister's house just across the street).
    I started to literally lol with the comment defending Flint or trying to compare it to NYC. It was almost to dumb to argue. NYC is a desired place to live because you can get a job within seconds compared to years of unemployment in Michigan. Culture may be a small part of the pull, but without GM or any huge employer in Flint... It's considered a s#!t town.
    Many abandoned homes are crack houses. Since the owners of those homes are investors from California or China as it was speculated. People squat in them. They are a breeding place of filth and addiction. A great place to raise your kids, and the arts! Laughable! The best advice a person can get is to move away. And if you can't then we need to ban together and fight against what is destroying not just Flint but the entire State. There is no abundance of opportunity here like there is in NYC. That is what is so great about NYC. But I also know it was hard for me to believe Flint was or is going downhill fast (as I was told while I was in the middle East in war back in 1991) I thought there is no way! 24 years later our 130k home was sold for 6k

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  6. Whenever I hear Frank Sinatra sing "New York, New York", I have to laugh. There are so many wannabes in NYC. It's mainly a matter of Statistics and Perception, whether one city is really better than another. Back in the 1970s, people would say that if you said one person or city or thing was better than another, that you were making a "value judgment". So No, stop laughing.

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  7. Wishing JWilly was still with us to chime in. He is missed.

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  8. I wouldn't buy a house in Flint unless I was running for Mayor or something like that. But Flint is not nearly as dismal, nor is New York City nearly as bright, as perceptions suggest.

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  9. Not Falling For ItAugust 18, 2015 at 3:19 PM

    People in New York City have CREATED a lot of Flint's problems. They advanced and expanded H1-B visas and illegal immigration which brought down wages. Oil Speculators on Wall Street promoted the false "Peak Oil" theory which drove the oil prices sky high in 2008. That resulted in the collapse of the old General Motors Corporation, and the loss of thousands more jobs and the reduction of wages for many workers. THAT is why the Flint housing prices have never recovered from the 2008 catastrophes. And it's not just Flint, and not just Michigan. People nationwide are suffering from these shenanigans. So don't tell us how wonderful it is everywhere else.

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  10. The Old ProspectorAugust 19, 2015 at 6:56 PM

    That job found in New York City in five minutes would probably require you to live in a 100 square foot apartment in order to afford living there. I couldn't live like that. Here's some pictures and a description of that 100 square foot apartment. It's enough to make you yearn for Flint.

    http://nypost.com/2015/08/19/inside-nycs-infamous-100-square-foot-apartment/

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