While I can not and will not argue with you about what is happening with regards to the State of Michigan’s economy, I think we can agree that Michigan is like the canary in the coal mine for the rest of the country! We have been in this funk for about 2 years, while the rest of the country is just now catching up with us.

We are the canary because of our heavy economic ties to the automotive industry, yes. Furthermore, we are not through the economic forest yet.

What this means to the savvy real estate purchaser is that there will be scads of homes to purchase. There are a bunch of foreclosures yet to come on the Michigan market this year.

And while that may depress house values further, what will interest rates do? If you are looking to time the purchase of a home at the absolute bottom, then you may be gaining a half to full point on your interest rate. Thereby nullifying any “gain” by purchasing at the absolute bottom.

June 19th, 2008 Detroit News Article: http://www.detnews.com/apps/pbcs.dll/article?AID=/20080619/BIZ/806190357/1012/BIZ03

The bottom of that article shows, by county, that sales for the year are UP by at least 9%. That means that purchasers, investor, you name it, have decided that NOW is the time to purchase.

Via data from http://www.bighousedata.com, through May 2008, Washtenaw County home sales are up over 23% compared to the same 5 months in 2007.

With regards to out of state money coming into the local real estate market, think about the capitalization rates on the coasts. Historically, the East and West coasts are running 2-4% CAP rates (CAP rate is the Net Operating Income divided by the purchase price). Those “Coast Dollars” are staring at the Midwest where our CAP rates run 7-11%.

If you could move your money from Bank A, offering 3%, to Bank B, offering 9%, would you?

That’s what we are seeing NOW in the SE Michigan housing market. Coast Dollars are arbitraging the markets and ending up here!

Those investors are buying portfolios of properties right now. In some cases, 30 cents on the dollar! When the market turns, and it will, those investors will make a killing!

http://www.bendoregonrealestateexpert.com/

Taking a look at the news recently, it would seem like you would be smarter to wait awhile to buy property in the state rather than buying now. The big 3 automakers are currently cratering, the state had it’s biggest jump in unemployment in quite awhile and the likelihood of foreign buyers snapping up property here seems kind of bogus with gas prices skyrocketing and airlines cutting back service like crazy. Unless you are talking about Canadians stepping in, and even then they are going to be hurting from high gas prices and a slowing economy as well. Additionally, it sounds like state and local governments are going to have to start slashing jobs like crazy which is going to make things even worse. This morning I heard that the Detroit school district is cutting 1700 employees, and will be closing several schools over the next year.

Could you post some Michigan specific data to support your claims rather than broad national data?