Houses cheaper than cars in Detroit

Need any more proof that the bottom is falling out of the U.S. housing market? Look no further than Detroit, where it’s cheaper to buy a house than a used car:

iStockphoto.com

At least 16 Detroit houses up for sale on Sunday sold for $30,000 or less.

A boarded-up bungalow on the city’s west side brought $1,300. A four-bedroom house near the original Motown recording studio sold for $7,000.

Sure, Detroit is something of a special case, given that it has famously fallen on hard times, hemorrhaging jobs for more than a decade and struggling to cope with a poverty rate ringing in at over 30 percent. Nobody’s saying that as Detroit goes, so goes the rest of the country. But it’s certainly a troubling case study in a housing climate that will no doubt see a rash of foreclosures across the country as the subprime mortgages crisis continues. People are going to be defaulting on home loans left and right—a recent report estimated more than 2 million Americans could lose their homes because of the lending crisis—and that’s not going to spell growth for the U.S. economy. Economist Nouriel Roubini writes:

The sub-prime and overall mortgage carnage is now likely to lead to a financial crisis whose cleanup and bailout costs will make the S&L bailout bill look like spare change.

Hang on to your shirts.