December in Michigan. Whoopie.
About as depressing as a place can be in the dead of winter, what with joblessness, auto company failures, low retail sales figures, falling home prices, and snow, snow and more snow, now there appears to be yet another deadly ripple in the housing crisis.
For three consecutive Thursdays in December, beginning with the 11th, 18th and the 25th, the Detroit News published an additional section to its already slim journalistic offering. This section, in actuality a legal notice, was devoted to Oakland County property tax foreclosures.
For reference, the majority of the Detroit area is made up of three counties: Oakland (northwest suburbs), Wayne (Detroit), and Macomb (northeast suburbs). My residence is in Oakland County. Back in Michigan’s heyday, Oakland County was once considered one of the wealthiest areas in America, home to Aretha, Lee Iacocca, the Taubmans, assorted ball players and captains of industry. People strove to build bigger, better and farther out, and Oakland County was the place to be. For a time, it was boom, boom, boom, baby. Obviously, in the ensuing years, we have fallen from that distinction.
I had ignored the “special” section of the News on December 11 and 18, but seeing as I had the holiday off for the third notice, I decided to peruse the listings. There I was treated to 28 full size tabloid pages, with a page and a half alone devoted to my city. Listed by address, name and amount of tax money owing, one could identify the delinquent payers. All told, there were approximately 10,000 homes, a record number, in danger of tax foreclosure, or about one in 50. Some were jointly held by homeowner and bank, likely in a mortgage situation, but a disturbing number listed only the property owner name, meaning these homes were paid for and there was no outstanding mortgage. The struggling homeowners have until March to pay up before the county comes in to seize the properties.
Merry Christmas to us all.
I’ve already heard plenty of anecdotal stories from local real estate agents who have seen people in enormous debt pick up their belongings and walk away. Even our water meter reader had a tale to tell. Some troubled homeowners took out home equity loans beforehand (back when you could still get one) and bought vehicles, furniture or big screen TVs before getting out of Dodge. Others stripped their soon-to-be foreclosed homes of kitchen cabinets, appliances, even light fixtures, wood molding and copper.
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Article comments
1 - Baritone
Joanne,
As you may or may not know, I am a real estate appraiser a few hundred miles south of you in Indy. Overall, Indiana has not suffered as much as other areas of the country with the exception of a few communities which, as you might guess, depend heavily on the auto industry for employment, taxes, etc.
A few years ago, at the height of the "boom" Indiana did not see the ridiculous rise in real estate prices, and conversely, we have not seen the horrific declines.
That being said, things still are far from rosy here. Real estate value declines vary here in Indy depending upon where a particular property is located. Broad Ripple, a trendy community on the north side of the city has long been very popular, especially with young people having some means, has seen only a slight (less than 2%) average drop in home prices during the past year. But some areas having less appeal, and consequently, less demand have dropped in average value up to 30% over the same time period.
Many of the newer "vinyl village" additions which have popped up in our suburban areas over the last decade or so are in real trouble. Foreclosure, or "short sales" generally outnumber arms length transactions in some of these subdivision 2 to 1 or even 3 to 1.
The Indiana governor, Mitch Daniels, recently announced that, owing to significantly reduced tax revenues, a number of initiatives and government programs will likely be severely cut back or abandoned altogether for the foreseeable future.
I recently saw a report on CNN (or perhaps MSNBC - I'm not sure which,) about an as yet unrealized real estate crunch involving commercial properties which will only serve to continue downward trends.
I know Dave has repeatedly stated that things aren't really all that bad, that people are simply in a panic which has a ripple effect in the economy. Perhaps he's right. But given the length and breadth of this downturn, it's difficult for people NOT to panic.
Consider how reactionary the stock market is. If someone from the Fed walks out of the restroom smiling, stocks soar upwards. But, if pretty much anybody so much as hiccups, stocks take a dive.
The larger economy doesn't react to good or bad news with quite the knee jerk response normally seen on Wall Street, but the news has been so bad, for so long, it is hardly surprising that people are frightened, and, yes, even panicky.
It has been both Michigan's blessing and curse being the epicentre of the US auto industry. You are likely correct that, while Michigan is currently one of the leaders with their souring economy, the dominoes are likely to fall througout the country over the next several months.
While I don't hold out a great deal of hope that the government - at any level - is going to be able to pull us out of this miasma in a timely fashion, I DO believe it is best for the next few years that the Dems are in control at the federal level. Conservatives here at BC and elsewhere assume that Obama, etal will fail and fail miserably. Obviously, that's a very real possibility. It would be no less so in Republican hands. They have no credibility upon which to stand. They cannot separate themselves from the disasters of the last eight years.
B
2 - Cindy D
Good article Joanne.
Here in NJ, Gov. Jon Corzine wants to give us a pension vacation...
New Jersey actually faces a potential...unfunded liability of $130 billion [which] is more than four times the state's 2008 fiscal year budget, and represents a shortfall of around $44,000 for every household in the state.
Why?
For years, the states have over-promised retirement pensions and benefits while seriously underfunding them. This phenomenon has allowed the real truth about state pension funds to be swept under the rug as governments freely spent the surpluses from a booming economy.
3 - Cindy D
Baritone,
Do you know anything about this? From what I understand, in a short sale, the short amount is seen as, I want to say "a gift" from the bank to the seller. Putting it into a taxable category.
So if the mortgage is 100k and the sale is 80k--the seller is subject to taxes on the 20k. What I'm wondering is, is that actually happening?
4 - Ruvy
[edited]
While we disagree on what you would call "foreign affairs", Baritone, your assessment that Obama cannot pull you out of the mess you are all in is right on the money. And your assessment that Republicans can't either is also right on the money.
You are all paying for a half century of mismanagement of your economy and living like pigs. It didn't take a wolf to blow down the American brick shit-house. A whirlwind has and still is.
Before you complain that I'm being nastily joyful in my comments (schadenfreude), remember that most of my family also lives in America, suffering along with you.
5 - Baritone
Cindy,
There indeed can be tax consequences for homeowners through short sale or even foreclosure. This, and a # of other articles have been posted online regarding such tax consequences. It just makes all this suck even more.
B
6 - Baritone
Ruv,
Oink!
B
7 - Christopher Rose
Yet the rest of your family has not chosen to follow you to Israel, Ruvy. Any thoughts as to why?
8 - Cindy D
escaped have you?