The concept was simple. Take dilapidated homes taken over by the city of Detroit and auction them off at a base price of $1,000 each. Bidding and eventual sales prices can go much higher, and many homes have sold for more than $10,000. But the program has stumbled badly. Only 46 homes are up for bid at that Building Detroit auction site. Those administering the program admit the failure indirectly. The Building Detroit site is only offering two houses per day.
Among the markers that the program has stumbled is the ease with which buyers can gain access to ownership, which should drive a large pool of bidders. Properties can be viewed online for at least a week. Potential buyers can inspect them at open house events. The people who bid must be Michigan residents, or people from outside Michigan who plan to live in the homes. People who have used the program before but have violated its rules cannot bid again. The home must be “rehabbed,” which means the house must be brought up to occupancy code. Within six months, the home has to have an occupant. While there are other rules, these are the primary ones.
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There may be several reasons that the program has failed. Among them is that the homes available tend to be in parts of Detroit that are not desirable for people who want to live in the city. Even $1,000 is not an incentive to change this. Another is the huge inventory of homes around the city. As people have fled Detroit, thousands of homes have become available for next to nothing. Some of these are in sections of Detroit that are more attractive than areas where the city wants to auction off homes.
According to Realtor.com, 1,102 homes are for sale in Detroit at a price of between $5,000 and $30,000. Many of them are already in shape to be occupied without going through the city’s bidding system. For people who want a cheap home, plenty are available through the normal means of purchase.
A system that only sells two homes a day cannot claim any success. Building Detroit has barely cleared that bar.
READ ALSO: 10 States Struggling With Delinquent Debt
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