I spent yesterday with a man who "retired" at age 50 in 1990, on top of the real estate development game in Atlanta. He currently has a company that buys foreclosed in-construction houses and lots, completes the homes, and sells them. The original builders are bankrupt, and the bank has a very limited market for the unfinished house. His typical deal goes as follows:

Expected 2006 Home Value: $300k
His company buys for $120k minus repairs/construction, i.e. $80k purchase + $40k construction
Sells for $200k with $12k commission for a $68k profit; 56% ROI

He also buys lots for 10 cents on the 2006 dollar but says it's still not profitable to build on them as long as the market is depressed by deals like the one above. He does not expect the lots to ever return to bubble value, but he's getting them so cheap that there is still plenty of room for a 100%+ profit after the market clears. The company owns over 1000 residential lots.

I asked if he thought Detroit housing would ever come back and he said he can't see how, unless they are somehow able to attract another industry there.