ALEX CHADWICK, host:
This is Day to Day. I'm Alex Chadwick.
MADELEINE BRAND, host:
I'm Madeleine Brand. Coming up, NPR's Ivan Watson is on his way to one of the world's most dangerous places. We'll hear from him in Kabul, Afghanistan.
CHADWICK: First, hello fellow homeowners. The news is out this week. Housing prices had their sharpest fall in 20 years. Residential property values fell more than 14 percent in the first quarter of this year. That's according to the latest S&P/Case-Shiller U.S. House Price Index.
BRAND: At the same, though, we heard that home sales are actually up in places like Las Vegas, Cape Coral, Florida and inner city Detroit. These are places with really high foreclosure rates. Carl Williams is a real estate agent in Detroit. He explains why, in such a rotten market, sales in his region are up.
Mr. CARL WILLIAMS (Detroit Association of Realtors, President): The increase is due mainly in part to the large number of foreclosures that are selling.
BRAND: Who's buying them?
Mr. WILLIAMS: Mostly investors are buying them because generally mortgage companies don't loan properties that aren't in move-in condition. So you have to have the cash money to buy these properties and fix them up, then you can either re-fin them, flip them or, which is happening now, is mostly renting them out and holding them.
BRAND: Investors, meaning, what kind of people?
Mr. WILLIAMS: People that have cash, so I mean there is real estate investors who making a living doing that. We've also had many of our plants closing. Many of the UAW Plants, American Axle for one is doing a buy up of Ford, Chrysler, GM have all done buyouts. So, these people have infusion of cash and they try and find a way of using it that's going to, you know, help them out since they aren't going to be working for a while.
BRAND: Cash, you say, how much are these houses going for?
Mr. WILLIAMS: Anywhere from 2,000 right up until a million, there's you know, a wide variety of foreclosures.
BRAND: Two thousand dollars for a house?
Mr. WILLIAMS: Oh, yes, you can buy a very nice house, brick house, in Detroit for 2,000 dollars.
BRAND: Wow, so you can really just put it on your credit card. I mean it's 2,000 dollars.
Mr. WILLIAMS: Absolutely, we're seeing people coming from all over the country and investing in Detroit real estate.
BRAND: In general we are seeing we are seeing numbers, statistics that show a drop in prices in the Detroit area of about 57 percent.
Mr. WILLIAMS: Well, the numbers that I'm seeing for the first quarter were between 25 and 30 percent drop in price range.
BRAND: Oh, OK.
Mr. WILLIAMS: And that's kind of deceiving in that you are putting - lumping all the sales together. Houses that are in move-in condition, which are mortgageable houses and the foreclosures. If you look at the mortgageable houses, alone, separate from the foreclosures, the drop might be around five to ten percent, but when you lump them all together with the large amount of foreclosures, it kind of skews the market. It makes it look a little worse than it actually is.
BRAND: I see. So, you have people coming in, investors, plunking down from 2,000 to a million, but the average is 100,000 dollars for a house.
Mr. WILLIAMS: Yes.
BRAND: And they aren't living in those houses? Or they are? What are they doing with those houses?
Mr. WILLIAMS: Mostly they are holding the houses and putting renters into them. Prior to last year, when the subprime dropped, they were able to flip them. They were able to find buyers for the houses, but now that the subprime market is kind of gone and your credit scores need to be 680 and above, generally and we are seeing that many of these investors are just buying the houses, fixing up and renting them. And they're excellent investments.
BRAND: And are they finding renters for them?
Mr. WILLIAMS: Yes, I mean everybody that is losing their house, they aren't going away, they've got to live somewhere and so, when they couldn't pay the mortgage, and now they are moving into these houses and renting them. We had one gentleman that owed 68,000 on his house last month it was foreclosed upon. One of his neighbors bought the house for 11,000 and is going to fix it up and rent it back to the same gentleman that just lost it.
BRAND: Wow. You say you're in a totally different market now then you were, maybe, just a couple of months ago - a few months ago. Where are you? I mean do you think that this is - you're at the bottom of the foreclosure crisis and you're climbing back up? Or do you think you still have a ways to go?
Mr. WILLIAMS: I certainly hope we are at the bottom. Many economists say that we are. I've heard some reports from the National Association that we should bottom out sometime in the summer. I've heard a lot of people say that Michigan was the first to hit, so we will probably come out first. But I think more important than worrying about that, is being prepared to deal with the market as it is. If it is a foreclosure market, as a realtor, I mean that is what we have to learn how to deal with- the foreclosure market. So we go to classes. We conduct seminars and we have meetings and we work on, you know, being good foreclosure areal specialists.
BRAND: Carl Williams is the President of the Detroit Association of Realtors. Mr. Williams, thanks for joining us.
Mr. WILLIAMS: Thank you.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.