A dark cloud over Detroit and a silver lining.

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_052619.pdf

http://www.smartmoney.com/investing/economy/the-new-prospectors/

Detroit home values led the nation in March with a decline of nearly 5%, making the Detroit market the most depressed in the nation with values at 1995 levels. While it is difficult for owners of now dramatically devalued real estate to see any bright side to the story, for those fortunate enough to be able to invest in real estate, there may never be a better time than now.

See the Smart Money magazine article about investors flocking to Detroit to invest in area real estate. I represent some individuals and companies who are betting on Michigan and actively engaged in the market. I am quoted in the article and have seen first hand how smart decisions in a down market can yield impressive returns.

With every turn in the market, there are opportunities and this time is no different.

Futures Index Suggest Slide in Values into 2010

http://www.nytimes.com/2009/03/07/business/economy/07home.html?hp

It appears that home values will not rebound anytime soon if this particular futures index of home values is to be believed. Although real estate markets are highly localized, it looks like no relief is in sight until at least 2010.

Personally, I believe that once the market finds a bottom, there will be a sharp, short run-up in home values as pent up demand in some sub-markets drives prices up before returning to more historic levels of appreciation. In the near term, however, when people have to move from their principal residence, renting the property or a short sale is probably still their best option.

Anything other than completely paying your mortgage in a timely way will adversely affect your credit score, but one must place a value on their credit score. Preserving a high credit score at all costs may not make sense for all individuals. A credit score simply provides access to credit and helps lenders price that credit. If an individual doesn't need credit over the short to medium term then perhaps a (dramatically) reduced credit score is not such a high price to pay for getting out from under your house.

March 7, 2009