On houses in Detroit

I couldn't believe the part about a house being sold for $2000. Unable to contain my curiosity I checked Zillow.com and sure enough, there are LOTS of houses going for
that, or less, and they don't look like they've been trashed nor do they appear to be located in slums and ghettos. I found one in Oak Park for $1000, three bedrooms and two bathrooms, completely updated kitchen and bathrooms, curb appeal... Wha...??????

So now I am REALLY curious. How can this be? What is happening that people are selling their homes for such a pittance? Is the Detroit area suffering from radiation poisoning? Weird mold infestation? Are the winters that bad?

A friend of me sent me this e-mail--it's a sentiment I've heard before, so I thought I'd comment on it. I'm no expert in the economics of home sales--but I think the etiology of this condition is interesting, so here goes.

1. Detroit's infastructure was built to accommodate 5 million people-mostly in single family dwellings. In the fifties, there were more single family homes in Detroit than in any other city in the world. Auto-industry jobs paid well, it was a growth industry, and almost all of the lower management, mid-management, and head honchos for all of the major auto companies worked and lived in the Detroit area.

2. The population topped out just under two million (some estimates say just over 2 million) in the late fifties, and now stands at a somewhere between 750-800 thousand. So there's a huge housing surplus.

3. In the late 90's and early 00's-when gas was cheap and SUV's were in, it looked like the auto companies might turn the corner. The city contracted out the demolition of some of the homes that had been abandoned, Then they convinced all sorts of people to invest heavily in building new housing--condos, apartments, lofts, townhouses. Then gas prices went up, and everybody realized that the auto companies were never going to make it out of the hole.

so a) there's a huge glut of housing in Detroit.
b) nobody in Detroit is confident they will have a job for very long. Even the Detroit Public Schools have had to close the doors of a number of schools to save money and pack more students into fewer classrooms.
c) housing prices are falling nationally anyway
d) the population of Detroit is still going down
e) forclosures have drastically reduced the price buyers have to pay for houses. Banks are unloading houses for a fraction of their former value, just to get them off the books.

On top of all this, taxes are not insignificant in Detroit. It is not uncommon for houses that are selling for 20,000 to have an annual tax bill of 10,000. And the city is very reluctant to lower the taxed value of the home. (an example of the impact of taxes here is the story of the restaurants on the block that was first announced as the location of the casino in town. Their property values shot up due to speculation, their tax bills went up, they went bankrupt, then the location was changed, but they stayed bankrupt and now there's a row of abandoned storefronts.)

The ripples of instability have spread out to neighboring communities, so that property values in nearby towns are also incredibly low.

It's a perfect storm of bad economic news.