After Detroit filed for bankruptcy protection last summer, the media was flooded with stories about Chinese investors pouring money into real estate there. Headlines like this one summed it up: “Chinese investors are buying up Detroit.”
When you look closer, though, there isn’t much hard evidence to support such a dramatic claim. Chinese investors are eyeing Motor City property, but they don’t seem to be in a big rush to buy.
To David Szymanski, chief deputy treasurer for Wayne County, Mich., one particular metric supports this claim: the county’s annual tax foreclosure auction. The auctions, Szymanski says, “sell thousands and thousands of parcels of property at very reasonable prices.”
The auction went online three years ago, allowing investors from all over the world to bid. Last year, nearly 20,000 properties hit the auction block, the vast majority of them in Detroit. Ninety-nine percent of buyers at the auction are still based in the U.S., Szymanski found, and while a tiny portion of sales did go to foreign investors, not a single purchase appears to have come from China.
The impression that Chinese investors were buying many properties didn’t appear out of nowhere. It started with those headlines about the bankrupt city, which were seen around the world and sparked excited Internet chatter as people in China learned of the incredibly cheap real estate.