Sunday, January 31, 2010

Location, Location, Location

Here's a 5 bedroom, 5 bathroom, 3,000 square foot house in Flint, Michigan for $74,900. With a 20% down payment, and a 30-year mortgage at the current rate of 5.13%, the monthly payments would be $326.44 (principal and interest). It was built in 1928 and last sold in 2001 for $225,000.

HT: Flint Expatriates Blog

22 Comments:

At 1/31/2010 10:08 PM, Blogger mongander said...

Downsized and Michigandized by the UAW.

 
At 1/31/2010 10:12 PM, Blogger Bill said...

Ironically enough, it is located just blocks from I-475, the "UAW Freeway" according to the map.

 
At 1/31/2010 10:13 PM, Blogger Bill said...

Beautiful house though. In a different city, it might sell for $500-600,000.

 
At 1/31/2010 10:35 PM, Blogger retire05 said...

That $3,100/yr taxes will certainly leave a hicky. Here in central Texas, the taxes on my home valued at $225,000 are around $2,500/yr.

Maybe that explains why we see so many moving vans coming into Texas with cars towing behind that bear Michigan plates.

Congratulations, Governor Sebilius, you and the UAW have made Michigan a ghost state.

 
At 2/01/2010 1:07 AM, Anonymous Phat Int said...

Yeah, but then you'd have to live in Flint, Michigan.

 
At 2/01/2010 1:08 AM, Blogger geewhy said...

Retire05...you've got low property taxes and an insane poverty rate. It's far worse than Michigan, which has the worst economy in the country. Texas also has the 7th worst violent crime rate in the nation. Michigan is 32nd. What exactly are you bragging about?

http://en.wikipedia.org/wiki/Crime_in_the_United_States

http://www.nccbuscc.org/cchd/povertyusa/map.htm

 
At 2/01/2010 1:35 AM, Anonymous Stephen said...

Just out of interest, I figured out the approximate net present value of the property taxes. Assuming a growing perpetuity with a 2% growth rate (this assumes the tax bill will grow at 2%) and a discount rate of 5%, the NPV of the property taxes is about $103,000, which is more than the list price. Essentially the government owns 57% of the value of this property.

 
At 2/01/2010 1:39 AM, Anonymous Pinion said...

Flint was the 13th most dangerous city in America in 2009. It has a 26% poverty rate, more than twice the national rate.

The property taxes are 4% of the sale price. Where I come from that's pretty high even though the absolute tax cost seems low. Taxes are more than 75% of that mortgage payment.

Median annual family income in Flint is $31,000 which is much higher than I expected. A family at that income saving 5% each year would have to wait ten years to get that down payment plus closing costs. Their mortgage and taxes would be about 25% of after-tax income which is not too high.

This is still a pretty high price home for Flint.

 
At 2/01/2010 1:41 AM, Anonymous Jon said...

geewhy:

how is crime rate related to the property taxes? Dont you think you can have both - low property taxes and also low crime rate?

If this is true - the 3000 dollars a year for property taxes, it is insane. That means that you pay off your house again, just on taxes - in 25 years. I know I didnt adjust for inflation rate, but you know my point.

the thing is, you get you salary, they tax you that. and what you save from taxed salary, you buy a house. and then government tax you again, when you have that house. does it seem to you fair? they just keep taxing your money over and over again. And it is just wrong...

 
At 2/01/2010 8:39 AM, Blogger Paul said...

"you've got low property taxes and an insane poverty rate."

An insane poverty rate exported from Mexicio.

 
At 2/01/2010 8:51 AM, Blogger Mark J. Perry said...

Note: The property taxes are probably based on the last sale price of $225,000. After the next sale at ~$75,000, the property taxes would probably be adjusted accordingly to something much lower?

 
At 2/01/2010 9:06 AM, Anonymous Lyle said...

As Mark noted the property taxes will be adjusted downward if the current owner files the appraisal and will definitely be adjusted downward if sold at the price. So given the ratio they will likley be in the $1000 range.
Anyway in Flint the fundamental problem was that it was a one company town. Recall that in the 1950s GM had more employees in Flint than it has in total now. Just out of curiosity what do prices in Saginaw look like? Being 25 miles away it can reflect some of the same economic issues, but also possibly different sources of jobs.

 
At 2/01/2010 9:40 AM, Blogger retire05 said...

geewhy, you may think that Texas has a high crime rate (Wikipedia is the resource for lazy people, btw), but considering that Texas has to put up with over 2 million illegals who have no respect for the law, and that the federal government refuses to do anything about it, I would say you would be a lot safer living in Dallas, Austin, San Antonio or Houston than you would be living in Chicago or New Orleans.

Also, we have no state income tax, companies moving out of Michigan and California are coming to Texas providing jobs, our unemployment rate is 2% lower than the national average, home values remained steady while others skyrocketed (Houston was selected as having the best home values in the nation), and we are a "right to work" state that was the last to enter the recession and now seems to be the first to be pulling out of it (according to chron.com).

Now, I would be interested in knowing what state you live in that is so utopian?

 
At 2/01/2010 11:34 AM, Anonymous Brad S said...

geewhy,

I'm going to say something that is rather politically incorrect about the supposed "insane poverty rate" of Texas: One man's social blight is another man's business opportunity.

Who's more blighted: The TX with the high poverty rate that has a continually growing economy, or a Michigan who has the industrial welfare state everyone supposedly wants that is about to be surpassed in Per Capita income by...Alabama?

 
At 2/01/2010 12:43 PM, Anonymous Benny The Man said...

You have to wonder if this is free trade in action. Other parts of the nation benefitted, such as Los Angeles, a huge port city.

No one, even the most ardent free trader, would contend that the costs and benefits of free trade are distributed evenly.

Detroit got whacked.

No doubt unions plyed a role. But we have unions in Los Angeles, and our house prices have boomed. The LAPD union contract is one to die for--three-day workweeks and six weeks off a year to start.

Japan and Germany are much more unionized than the USA. And their auto industries have done well.

The obsession with a strong dollar might havve hurt Detroit. I never understood the strong dollar crowd.

Also, when Harley Earl passed away, design died in Detroit.

 
At 2/01/2010 2:57 PM, Anonymous Pinion said...

It's plausible that the property MIGHT be reassessed and taxes will be lower, but that's not what the listing says.

Since Dr. Perry lives in the area I would guess he knows something about taxes, but rather than just stating the property would be reassessed I would have appreciated more to know the property tax rate for Flint and/or Michigan.

I went to the Michigan Department of Treasury Property Tax Estimator and got a tax figure at a selling price of $74,900 of around $3200 depending on school district. This is consistent with what the listing says. At $200,000 the taxes would be over $8000 per year. That was at the 2008 millage rates.

This is also the "asking" price. Final selling price may vary. Your evidence of bidding wars suggests this house will sell for more.

 
At 2/01/2010 9:46 PM, Blogger Kelly D. Miller said...

Good luck with ever seeing taxes on this house of $8,000 per year. The city of Flint is taxing this house to the tune of $3,000 per year based on taxable value of $74,100. In Michigan, taxable value is what taxes are based on (approximately 1/2 market value). So, the city says this house is worth 74,100 x 2. If this house sells for $75,000, you have an easy case with the assessor's office to cut your taxable value in half to $37,500. Therefore taxes are halved to $1,500.00 year. This house would have to reach a market value of $400,000 to have property taxes of $8,000 per year. Good luck.

http://taxes.cityofflint.com/display.asp?parcel=41-17-105-007

Also note, listed square footage per assessor is less than 2500 - I know realtors that have paid for house additions because of this error.

 
At 2/01/2010 11:17 PM, Anonymous Lyle said...

Kelly caught it right in MI due to Engler the assessed value and the taxable value differ. His note suggest property taxes of $1500 per year which is roughtly the 2% per annum average natural rate. If it was at 8000 that would be a 10% rate and there would be a grand march on lansing with ropes and pitchforks to dispense with the state government. One has to be careful for a long time various Texas juristictions used varying percentages to go from assesed value to taxable value until the legislature fixed that. Note that if you buy the house at this rate your taxes can not increase more than a small percent a year in MI due to valuation creep as MI has a version of prop 13 from ca.

 
At 2/04/2010 11:30 AM, Anonymous Pinion said...

Can you people read?

I went the the Michigan Department of the Treasury website and put in a selling cost of $74,900. The taxes depended on the selection of school district which I didn't know, but the average was around $3200.

The $8000 tax figure was what I got when I put $200,000 in the calculator.

So what you're saying is the MI Dept of Treasury doesn't know how to calculate taxes. The fact that the calculator (from the official tax authority) and the listing (which must be disclosed in good faith) are in harmony gives me good reason to suspect both are correct. That's a 4% property tax rate.

Cease speculation. I did my work to find this figure. If you can find a reference to a better calculator or source of information on millage rates, provide it.

 
At 2/04/2010 12:38 PM, Blogger Kelly D. Miller said...

Wow - talk about getting your underwear crunched in a bunch! Geez, relax. Normally, I wouldn't respond to such a rude response, however, your facts are so misconstrued, I just can't pass it up.

Yes, I can read, the question is can you? It doesn't say to enter the selling cost, it says to enter the SEV. SEV is not selling cost, SEV is approximately 1/2 of true market value. Hence the discrepancy, you are entering $200,000 for SEV which equates to $400,000 market value = $8,000 in taxes. Just like I said; you need market value of $400,000 to have property taxes of $8,000 per year. The State and listing info. are correct as you said, it is the 3rd variable (you) that screwed it up. Speculation ceased.

One other thing, misstating the square footage by over 500 (20%) is not excusable just because the realtor has attempted "good faith". A good faith attempt would involve the realtor getting a calculator & tape measure and getting off his hindquarters to measure the house. If he is too lazy to do that, at least be conservative and state the square footage as listed on COF website. If the square footage is indeed 2500, a smart buyer would be in court getting a court order for a 500 square foot addition.

 
At 2/04/2010 5:15 PM, Anonymous Anonymous said...

RE: crime in Texas vs. Michigan.

In Texas, you can shoot back. You can expect your neighbors to pitch in, too.

In Texas, "He needed killing" is a valid defense.

 
At 2/04/2010 10:15 PM, Anonymous Anonymous said...

I used to walk by this house back in the 70's when I was in Jr. High. Thought how rich folks live in this neighborhood. My how things change.

 

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