Detroit: Thousands of homes swamp the market

USA Today reports:

When General Motors sneezes, the saying goes, the nation gets a cold. But now it looks as though U.S. automakers have the flu, and the Detroit real estate market is in intensive care. The symptoms: Nearly 7,000 homes, more than a year's worth, are up for sale; 7,422 homes in the county are in foreclosure (that figure swelled by 39% in July alone); and prices from January through June are down 6.6% from the same period last year.

"A lot of people have been laid off or lost their jobs (in the auto industry), so there's a ton of inventory, more than I can ever remember in the last 20 years," says Terry Ozak, an agent with Re/Max Prestige. The unemployment rate in Detroit is 8%, the highest of any large U.S. metro area. For sellers, there seems to be no short-term relief in sight.

Economic fundamentals, like an area's job base, determine home prices in the long run.