Houses Costs Less Than Cars In Detroit

The mortgage crisis in America has deepened so much that family homes can now be bought for less than the price of a new car according to The Telegraph.

A four-bedroom home near the original Motown recording studio in Detroit recently sold for £3,700 ($7,000), less than most used cars. A boarded-up bungalow fetched £685, and a three-bedroom house listed for £276,000 attracted just £69,000.

Detroit, which made its fortune on the back of the car industry, now holds a more dubious distinction: the capital of home repossessions.

The decline of its main industry has seen Detroit suffer more than other areas from a crisis that is sweeping the United States and has sent a big chill through the whole economy and global stock markets.

Up to 1.5 million Americans could lose their homes in the next two years, while repossessions rose by 42 per cent in 2006. The vast majority of those at risk are borrowers hit by the sharply rising costs of “sub-prime” mortgages offered to low income buyers, often with bad credit ratings. Lenders typically offer loans at attractive “teaser” interest rates which after two or three years leaps, doubling repayments in many cases.