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03/25/2013

China thrills at Detroit: where homes are as cheap as a pair of shoes

DetroitHouse2
A vacant, boarded up house in Detroit's once thriving Brush Park stands against the city's skyline. (Rebecca Cook/Reuters)

Would-be Chinese home buyers – stuck in the most overheated housing market in the world – appear to have been gripped by ‘Detroit Fever,’ learning they can buy two homes in the Motor City for the price of a pair of designer shoes.

Fiction?

Not really.

It all depends on how much you’re willing to shell out for shoes.

China Central Television (CCTV) aired an interview last week with Detroit real estate agent and entrepreneur Jasmine McMorris who told the state broadcaster she has bought more than 360 Detroit homes herself – many costing just $500.

One she recently purchased was 230 square metres and cost her $2,300 – a measly $10 per square metre.

Chinese viewers stared into their screens agog.

On average, new homes in Chinese cities sell for  $1,600 per square meter.

In the Chinese capital, Beijingers typically say, “it takes three generations” to buy a home.

Part of the reason for that overheated market is that Chinese investors see real estate as one of the few stable storehouses of value in the country’s still-relatively undeveloped financial markets.

On hearing Ms. McMorris speak of Motown’s landscape of opportunity, Chinese cyberspace lit up with more than 1.2 million posts by the weekend.

“One pair of leather shoes buys two apartments,” crowed one. “One square meter in Beijing equals a two-storey house in Detroit.”

The Beijing Morning Post reported that one Chinese real estate agent claimed he’d received more than 1,000 calls from people interested in organizing a tour to Detroit scope out the city’s investment potential.

The Communist Party’s mouthpiece, The People’s Daily, fueled the fire, so to speak, by noting that some Detroit properties can be had for $100 – or less.

Nowhere, however, was there any mention that Detroit is still saddled with 78,000 abandoned buildings from which homeowners and business people have simply walked away during decades of decline.

Still, if Chinese homebuyers and investors are poised to make a move, perhaps they should do so quickly.

Some see signs that Detroit is in the early stages of a turnaround.

The S&P/Case-Shiller index shows that home prices in Detroit rose 13.6 per cent in December. That’s the city’s single largest jump in real estate prices since at least 1991.

Related: Bill Schiller on what's behind Detroit's summer of fire

Bill Schiller has held bureau postings for the Toronto Star in Johannesburg, Berlin, London and Beijing. He is a NNA and Amnesty International Award winner, and a Harvard Nieman Fellow from the class of '06. Follow him on Twitter @wschiller 

Comments

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Detroit real estate looks good until you see the condition of the houses, the neighbours, and the crime, not to mention the property tax you'll be paying because the city is broke.

Well, sure, the house costs nothing but the taxes are significant and the costs of upkeep astronomical (including security). Good luck with that.

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