Detroit is hardly lacking for symbols of its Great Recession free fall, but there's fresh evidence that the Detroit real estate market continues to be the most troubled in the United States.
While some regions are starting to report a bottom for housing prices, Detroit continues to offer some of its majestic past for just pennies on the dollar. That includes the grand old home once owned by the family of James Scripps - the man who founded in 1873 what is now the Detroit News.
According to Brian O'Connor, Detroit News Finance Editor, the wood paneling that adorns some of the walls at Scripps home in the historic Indian Village real estate market of Detroit looks a lot like the paneling inside the News headquarters. That makes sense, since the News building and Indian Village homes were built at the same time.
But whereas the News has been able to hang on despite the newspaper business downturn, the former Scripps home is in foreclosure, another symbol of Detroit's slide.
Now, for $195,000, a buyer can own the 12,000-square-foot home at 2535 Iroquois Street that has for a century stood as a stately reminder why Detroit of the Gilded Age was once called "The Paris of the West."
Taxes are the issue
According O'Connor, the city's fiscal woes haven't just hurt the list price of the Scripps home, but the home could be hit with higher taxes.
"Whoever buys this house may also get hit with a big jump in property taxes, thanks to a state amendment that limits how high taxes can rise on any one homeowner. Once the home is sold, however, the tax rate resets to the new price which, even now, can be more than the old limited value," O'Connor said.
With 6 bedrooms and 5 bathrooms, the property needs work but has the grand space that would make it a worthy rehab project, given the library, family room and large entertainment hall. Who knows, maybe restoring this home would coincide with a Motor City comeback - although O'Connor offers a bleak forecast for Detroit's fiscal recovery, especially the real estate market.
- Detroit values are in a free fall. While other major cities in the U.S. have seen home values decline, all of them except Detroit remained above at or above their 2000 values even during the depths of the Great Recession.
- In Metro Detroit, however, values dropped down to levels not seen - on average - since the 1980s. The city also has been hit by an ongoing financial crisis in the schools, cutbacks in city services, very high insurance rates (due to crime and fraud) and a virtual exodus of the middle class. A city that was home to nearly 2 million people in the 1960s is now down to 700,000 residents - but still faces keeping up the same infrastructure with a far lower tax base.
- Investors have scooped up scores of foreclosed homes in Detroit for cash, some selling for just a few thousand. Real estate experts say they assume one-fifth or so of the properties will be uninhabitable, but that the rest can be inexpensively fixed up and rented, while the investors wait for values to rise. We've had organized bus tours of Chinese investors come through town, for example.
- Right now, the city is on the verge of bankruptcy, while the state tries to negotiate an emergency financial manager who can come in and cut budgets, tear up union contracts and restructure or privatize services.
Other Scripps properties
Meanwhile, James Scripps' original mansion at Trumbull Ave. and Grand River Ave. burned down, leaving only a gated entrance. Among other public buildings left by James Scripps is the Detroit Institute of Art.
Scripps' son, William, went onto the embellish the family legacy, taking over the News and becoming an aviation buff and, in 1927, building the real Scripps Mansion - a mammoth Tudor-style mansion at 1840 W. Scripps Rd. in Lake Orion, MI.
The property remains on 45 acres of what was original 3,200 acres of sprawling farmland - so big that Amelia Earhart once used the Scripps' airstrip. In 2007, the Scripps Mansion was entered into the National Register of Historic Places.