As late as 2017, you could purchase a house in Detroit, Michigan, for as little as...

As late as 2017, you could purchase a house in Detroit, Michigan, for as little as $100.Explain how this might be the case, using supply and demand.

Solutions

Expert Solution

For price of anything has to increase what has to happen is the demand has to increase faster then supply.

Let us see what are thebdemand drivers : population has to increase for increase in property of price and if population decrease there might be slashed property prices.

Income that is if income level increase the price of the housing will go up and vice versa.

The price tags were looking convincing 100 dollars so we had digged further in Detroit housing market , what we found is given below:

House of price is down but taxes are high there. Home owner pay taxes based on city assessment of there home. And according to study home value are over assessed. So we have to pay taxes on over accessed values that means we have to pay high value of taxes.

So it's cheap but taxes are high and if you couldn't pay the taxes because of some reasons then county will charge interest on that and last option goes to auction.

Rahul Sunny answered 1 year ago

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