DETROIT - It was their dream home, a two-story, four-bedroom colonial in one of Detroit's nicest and most stable neighborhoods.
But then, one day in December, City Councilman Kwame Kenyatta and his wife packed up their belongings, locked the doors, mailed in the keys and walked away — adding another vacant house to the thousands in a city hard hit by the nation's mortgage crisis.
"We're already underwater when it comes to what we're paying on the house versus what the house is worth," Kenyatta said.
Around the country, the practice, sometimes referred to as "mortgage walking" or "jingle mail," appears to be growing. But for Kenyatta, the decision could do more than hurt his credit rating.
It could damage his bid for mayor of Detroit this summer, particularly since he has been one of the city's most vocal supporters of measures to improve neighborhoods and clean up blight.
"If I'm going to follow you, you need to be a leader," said Patricia Dixon, a former neighbor of Kenyatta's. "You don't show leadership by walking away from your home in the city of Detroit. You have vandalism where they find out the houses are vacant. You have people stealing fireplaces."
Kenyatta, a Democrat, is not the only elected official facing mortgage trouble. The Wayne County prosecutor's Detroit home has gone into foreclosure. And California Rep. Laura Richardson nearly lost her home before she paid up delinquent home loans.
Walking away from a mortgage isn't illegal; the bank takes possession and tries to sell the house. But "it just puts more properties in foreclosures, and that's the last thing we need right now. That's just pulling the median sales price down," said Karen Kage, who runs a real estate listing service in suburban Detroit.
In Detroit, the median sales price for a home is now a pathetic $5,800, down more than $66,000 from seven years ago. An estimated 16,000 foreclosed homes are on the market in the city of about 920,000 residents. Detroit also has one of the highest unemployment rates in the nation, at around 20 percent.
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New York City Real Estate Prices To Fall At Least Another 35%
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This can't be true. Average price for a home $5,800? Where is Axel Foley when you need him.
ReplyDeleteSo you have a house like the above that would normally be $150,000 or so, your payment are about $900/month, but the house is only worth $5,800 total?
ReplyDeleteIf there are people buying homes and renting them out what are they charging? $299.99 a month?
It's median...not average...Median is the total number of homes and you find the price of the home right in the middle. Median is used to limit to effect of homes skewed too high or too low that is affected if you look at the average.
ReplyDeleteAnonymous #2 - these homes were worth $150000 a few years - NOW they are worth $5800. And, people aren't renting out homes... they are abandoning them. People in California are even selling their houses for $1!!! Because they can't afford California property taxes and are losing jobs.
ReplyDeleteWow.. Just WOW. $5800 for a house? People spend more on cheap imported electrical goods now days. I find it hard to believe things are that bad over there. I feel sorry for the folks struggling there, while your leaders and bankers bathe in money.
ReplyDeleteWell I went to Craiglist to see if this was BS. I did see a lot of decent actual homes for around $12k. Wow. The facts speak for themselves. Nothing like seeing something with your own eyes.
ReplyDeletehttp://detroit.craigslist.org/reb/1175561520.html