Saturday, March 31, 2007

Many Houses in Detroit Cheaper than the Average Car

BusinessWeek reports a strange anomaly - many houses in Detroit are now cheaper than the average car. This reflects two trends- one, the average car is now $29k- that seems like a lot to me, but I believe it. Also, it reflects how bad things have been for Detroit automakers, and consequently for Detroit. But they reap what they sow. Labor contracts negotiated long ago that pushed tons of costs to the future (especially medical payments and pensions) allowed them to be profitable for a bit. Also, they lost their edge to Japanese car firms. I personally don't think I will ever own a GM or Ford or Chrysler, and will probably only have a Japanese vehicle. I would be more likely to get a Korean car than an American car, actually.

Again, this makes me think of the importance of mobility. Think of all the autoworkers that bought their houses and then lost their jobs because of their company. They had a home they owned and couldn't just up and leave. And because lots of people lost their houses, they couldn't get the same value they could have before. If they had rented their houses and done more things to be mobile (like not have a garage and storage unit full of stuff), they could have up and moved to Indiana, Texas, or especially Mississippi, where the Japanese cos are building massive new facilities. I wonder if at some point a Japanese Co will build a major plant in Detroit, a true twist of fate.


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