Home Demolition Costs in Detroit Exceed Property's Value in Many Cases

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Burnt-out, dilapidated homes aren't worth much. So just tear it down, you say? Now that'll cost you. In Detroit, a city littered with the ruins of abandoned homes, the cost of demolishing beat-down properties, in many cases, is more than the homes themselves are worth.

Take the case of Dream Hampton, an author who collaborated with rap superstar Jay-Z on his book Decoded. Hampton wrote in a Detroit News column that her childhood home on the east side of Detroit was set ablaze by a tenant. Hampton's mother, who owns the home, was evicting the tenant for not paying rent. The inside of the house was destroyed from top to bottom, leaving only the shell of the home remaining.

Now faced with having to tear down what remains, Hampton told public radio program Marketplace that the bill for demolition will be more than $10,000 -- far exceeding what the home is worth. She said that homes on her block in similar condition are selling for $2,500. That amount will only cover the removal of asbestos that has contaminated her dilapidated childhood home, Hampton said. Aside from asbestos removal, she expects to have to pay for cutting off electric, gas and water service to the home, dumpsters and landfill space as the home is disassembled, and demolition insurance.

This is hardly a unique case in Detroit. At the beginning of 2009 -- in the middle of the worst of the housing decline -- median home prices in Detroit fell to a mind-boggling $7,000. (Not $70,000 -- we're not missing a zero.) Now many of these homes were abandoned and neglected, but not in the shape that Hampton's home was after the fire. Median home prices in Detroit have come up a bit since then, but if we're talking about homes in need of demolition, they're still worth a lot less. A few homes in the worst shape could even still be had for $1 -- which Detroit became infamous for -- as recently as last November.

The average cost of demolishing a home? That would be $10,000, according to Detroit 2020. By December 2011, the City of Detroit had spent about $20 million demolishing 4,000 homes, MLive.com reported. (Most of that money came from government grants.) By now, 6,380 homes have been demolished, and Detroit Mayor Dave Bing aims to have 10,000 demolished by the end of his term this year, the mayor's office said. There could be a cheaper way to take down a home than demolition, though: Recycle it.