06-04-2008, 04:58 PM
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Second Great Depression in Detroit
I've had a minor obsession with Detroit for the past year or so, ever since I learned that one could purchase a single family home there for $5,000 or less. In the world of sky high housing prices in my adopted hometown of Boston, $5,000 wouldn't be enough for even a down payment on a tiny condo. In my neighborhood, converted duplex units start at $350,000. Apparently there are people willing to pay that much for half a duplex, but I'm not one of them. Needless to say, for countless young people like myself who have been shut out of the inflated housing market, the idea of a home of my own (and several investment properties to boot) for the price of a used car was intriguing.
When I told people of my Detroit obsession, nearly everyone laughed at me. "Why would you want to move there?," they asked incredulously. I took this as an encouraging sign - after all, any good investor knows that the way to riches is to find value where others simply aren't looking. Mocking laughter is an especially good sign. So it was with great optimism that when an opportunity for me to visit Detroit arose, I jumped at it. My wife and I were returning from a business trip to Taiwan, and by chance we had a stopover in Detroit.
The first thing that struck me when we got off the plane in Detroit and into our rental car was the price of gas. It was well over $4.00 per gallon - shockingly higher than when we left Boston two weeks prior. Our hotel was in a Detroit suburb called Southfield, which is about 15 miles from Downtown, but jetlagged as we were, we decided to take a peek at the city before doubling back and checking in at the hotel. Speeding down the highway towards the city center, we noticed the miles of sad houses lining the freeway on either side. Many of them - the majority of them - were semi destroyed: Windows broken, roofs collapsed, paint peeling away to expose the bleached gray wood below. Some were just charred skeletons. It was an eerie feeling, zipping down a modern highway that bisected a ghost town...
Safe Haven | Second Great Depression in Detroit
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