Over the past twenty years, no one has confused Detroit, Michigan with a symbol of prosperity.

The city’s population has been cut by more than 60% from its peak in 1950, and has long since been a symbol of the decline of industrial America, starting with the near-collapse of the American auto industry just a few short years ago. What’s more is that from a real estate standpoint, few cities have been so littered with foreclosures as Motown, with entire neighborhoods and downtown complexes standing eerily empty.

Now, there are thousands of foreclosed homes for sale in the greater Detroit area, so many that in some notable cases, investors have purchased homes for just hundreds of dollars – representing staggering discounts of near 95% in some cases. Approximately one out of every 108 housing units are in some phase of the foreclosure process, which is good for the 22^nd highest foreclosure rate in the country.

With such a high rate, it would seem as if there was a healthy foreclosure market in the city. That is not the case, as many buyers are finding the supply of foreclosed homes to be unsatisfactory. Many of them are damaged and neglected, the product of months – if not years – of abandonment and vandalism. Some entrepreneurs are attempting to renovate mass blocks of these homes and turn them into stable, attractive properties, but that process is more difficult than many imagined it to be.

The foreclosure rate in the city is also set to increase, judging by the latest numbers. While the overall number of foreclosure filings in the city have declined from this time last year – a drop of 32.8% in the metropolitan area – filing rates have actually increased over the past few months, with a 30% increase coming from August to September.

The increase in foreclosures and favorable attitude to foreclosure in the city has led protestors in the Occupy movement now sweeping the nation to turn their sights on banks in Detroit, in a bid to halt foreclosures altogether. The prime target here is Bank of America, which has an office in downtown Detroit and has been one of the main drivers of foreclosures in the city.

What signs does the situation in Detroit reveal for those interested in foreclosure investing? In some ways, Detroit is much like the rest of metro America – a city littered with ample foreclosures, ranging from single family homes to multi-family homes. A high percentage of these are low-end homes that need restorative work in order to make them attractive to potential buyers (or even have them meet code at all).

Detroit, like other cities, is experiencing an uptick in foreclosure filings over the last quarter as banks begin to open up their processes and resume sending foreclosures to auction after almost a year of sitting on these properties. And like other cities, Detroit is experiencing bidding wars for quality homes in good areas of the city because of a lack of supply – which means investors who find the right foreclosure can make an impressive profit.

Opportunity abounds, and will continue to do so in the Motor City as 2011 ends and 2012 begins.

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Written by Alex Rolim.