Regardless of the area of the state of Michigan from the Upper Peninsula to the Motor City of Detroit or anywhere in between no county of city in Michigan has been untouched by the economic down turn or the mortgage meltdown that preceded it. Foreclosure homes are available across the state in greater numbers today than in any other time in its history. With the industrial base of the state being decimated by the near collapse of the automotive industry, Michigan has been hurt more than nearly every other state in the Nation. This is bad news for most residents in the state but seen differently is surprisingly good news for smart real estate investors.
Michigan in general and Wayne County in particular has long been considered the home of the American auto industry and recent upward movement in the auto industry has created a climate of opportunity for real estate investors that they are unlikely to see again in their lifetime. Currently Michigan's unemployment figures ranks as the third highest in the nation and the only one state that has the ability to bounce back based primarily on a single industry which the federal government has invested billions of dollars into.
Michigan is experiencing an unemployment spike of 13.6% which is coming down as this is being written. Other industries that positively affect the economy in Michigan are cereal production, information technologies, aerospace, military equipment manufacturing and agriculture. Michigan is the fourth ranked state in the nation for high tech employment mainly because of its infrastructure regarding research and development where it ranks third in the nation. During the transition from a primarily industrial based economy to a more diverse one that incorporates greater growth industries the foreclosures in Michigan will likely remain high.
As the MI foreclosure listings continue to be higher than the national average the economy has more than its fair share of opportunities for rebound as many of Top Fortune companies make their home in Michigan. General Motors and Ford to Dow Chemicals and Kellogg all are quartered in Michigan and thousands of other companies have a major presence in the state from AT&T to Walmart all of which offer jobs and an opportunity to create a breakthrough.
Foreclosures are in no short supply in Michigan even though the industrial base and the high tech sector continue to grow. This glut of foreclosures does not automatically mean that every foreclosure is a good deal or should be considered for purchase. In order to research what and what not to buy most research can be performed free of charge on USHUD.com.
When buying a foreclosure it is important to consider the employment situation in the particular area. For example buying a foreclosure in Lansing, Ann Arbor or Dearborn where education is a leading economic driver is far different than buying a foreclosure in cities like Detroit or Flint where the industrial base has shrunk over the past several decades creating the term new to our national lexicon "deindustrialization". While Flint is transitioning to an economy based on higher learning, Detroit is too large to make such a dramatic shift and is plagued with high crime and low home values.
This is great news for today's Real Estate buyers as the numbers of unemployed indicate that jobs are not the primary reason for the number of mortgages in default. These numbers indicate that the foreclosures in Michigan are much more to do with the sub-prime mortgage meltdown and have little to do with the local economy.
So buying a MI foreclosure listing will not leave the owner with a unsalable property but should instead leave the new owner with several different options to make money from a wise investment. Either reselling the home to someone that could not afford their previous mortgage (after it adjusted upwards) or rent the home to create positive cash flow immediately.
Regardless of the end result Michigan currently offers smart Real Estate investors the opportunity of a life time as the number of potential buyers has not diminished and there is an abundance of real estate at reduced prices that can be taken advantage of.
As the eighth most populated state in the country and an area that ranks 11th in the nation, the population density is sixteenth overall and this means that there are a high number of potential buyers for any home that could be purchased as a foreclosure and then resold to that same highly dense population.
Population data is very important when it comes to making a purchase of a home, be it a foreclosure or not. You must have someone that wants to either buy it from you or rent it from you in the future. With an Real Estate investor the word future can mean later the same day as with an owner occupant "future" could mean 3 to 5 years. Either way, either way if you are buying a foreclosure in Michigan, anywhere in Michigan the population of the area must be taken into consideration. High population means a better chance for a quick and profitable sale. The more rural the home the lesser the chances of getting that quick sale that can mean all the difference, especially in a troubled economy.
As Michigan's Real Estate market continues to reset itself and prices continue to adjust and mortgages also continue to adjust, more and more Michiganians will lose their homes by simply walking away from what appears to be an untenable situation. If the average home in Michigan has lost 15-20% of its value than the average mortgage will take 5 additional years before it starts to build its first dollar of equity.
This negative equity position sometimes referred to as being underwater or upside down on the mortgage is motivating more and more Michigan home owner residents to stop paying their mortgage as the situation gets dramatically worse when the bank adjusts the mortgage rate upwards and monthly payment quickly becomes unaffordable.
You should be buying homes that have been foreclosed on. Buying as many homes below market as your credit can withstand. Why buy in a down market? Buying in a down market and not trying to time the market perfectly will allow the smart investor to buy more foreclosed homes and rent them out before buying additional homes and repeating the process. Remember all of those people that lost their homes will still need a house to live in and provide their family shelter. This is where the greatest boom in recent history for the state of Michigan will likely come from. If you are not in the game, get in the game.
This economic recovery process could take another 24 to 36 months before it is completed and equity starts to accumulate across the board. However if the savvy investor or home buyer makes a purchase in the market today the rewards will be multiplied far beyond buying in a steadier market.
Michigan is made up of 83 counties with the most significant real estate profit potential in Allegan County, Bay County, Berrien County, Calhoun County, Eaton County, Genessee County, Ingham County, Jackson County, Kalamazoo County, Kent County, Livingston County, Macomb County, Monroe County, Muskegon County, Oakland County, Ottawa County, Saginaw County, St. Clair County, Washtenaw County and Wayne County. This does not mean that if the county is not in this list it is not a good investment. The single common denominator here is high population. There are other variables that must be balanced in order to make an educated decision to either buy a foreclosure in a particular area.
Other variables in Michigan include but are not limited to, where a home is located, density of that areas population, which can vary greatly in Michigan, what is the economic outlook for that particular county or area of that county, how much is owed on the home and how much the particular home is worth in today's market.
In order to take full advantage of all that the foreclosure market has to offer in the state of Michigan read more about how to buy foreclosures and educate yourself on the communities you are most interested in buying a foreclosure. Start shopping here for the foreclosure home that meets your needs. You will constantly find foreclosures in Grand Rapids, Warren, Sterling Heights, Lansing, Ann Arbor, Flint, Clinton Township, Livonia, Dearborn and of course Detroit. If you are facing a pending foreclosure call a local real estate professional and determine what types of options you have. Your options will depend on your particular situation.
Q. Does the higher number of foreclosures mean that there are too many homes already for the population?
A. No, Michigan has been and will continue to be a destination for others from outside the state and has its own institutional economy. Residence will always need homes and a good investment today in a down market will result in a better upswing in the future.
Q. Has the average home in Michigan lost more of its value than in other states?
A. Yes, but this is good news as the real estate market continues to improve an investment today will reap higher rewards in the near future. Recent Federal initiatives have also created an environment which has placed the majority of the blame on the banks and removed the financial stigma of being foreclosed on. Thus we will see more foreclosures until the sub-prime mortgages have all been purged from the system through foreclosure, sale or refinance.
Q. Why would Michigan be more affected by the mortgage crisis?
A. With an extremely auto-centric economy Michigan has been the unfortunate victim of a once two punch starting with the terrorist attacks on 9/11 which hit the automotive world hard as oil prices were unclear and the auto industry lost countless jobs. The second punch was the mortgages meltdown combined with the global economic down turn. Auto executives were powerless against the unions and the pension bubble burst. Michigan is unlike any other state for this reason and should recover on the strength of its people.