Nobody’s Home

Yesterday I was scrolling through our local craigslist looking at the job ads and saw this:

We coordinate the securing and cleanup of foreclosed properties and are looking for people to sign up as vendors who have skills and/or experience in the foreclosure industry. You need to have a digital camera, a computer, your own tools, a reliable truck and hopefully a trailer. You need to be able to change locks or rekey locks, remove debris, perform janitorial services & cut lawns.

According to some sources more than one and a half million homes have gone into foreclosure since the beginning of the Great Recession and are owned by banks, or the federal government.  More still lurk in the shadow inventory – homes that are stalled in the foreclosure process or inhabited by owners who have given up paying the mortgage on a house worth less than their buying price.  Many of the foreclosed homes have not been resold, due to tighter lending policies and bargain hunting buyers waiting for the prices to bottom out.

This means that there are a lot of vacant houses in the U.S.  Most are clustered in cities hardest hit by the Great Recession – New York, Las Vegas, Detroit, for example.  These houses are a problem.  Although legally the responsibility of the mortgage holder, the cost of upkeep (mowing lawns, repairing broken windows, draining pools) and security is frequently falling on the local governments, taxing already overburdened city budgets.  Unmaintained vacant houses are an eyesore and a drag on neighborhood property values.  As property values fall so do the tax revenues.  Vacant buildings attract squatters, youth looking for hangouts, gangs, thieves and vandals.  They are frequently broken into and have been destroyed by accidental or intentional fires, requiring the attention of police and fire fighters.

As the housing market continues to be depressed (and some experts do not expect it to rebound for years to come given the continued high unemployment, constrained borrowing power and glut of available homes at low prices) cities and the federal government are looking for ways to deal with the problem.  They have taken two different approaches – cities condemning and razing vacant buildings and the federal government selling blocks of homes to investors who enter into an agreement to rent the homes out for a specified number of years. Both of these plans have merit.

According to a GAO report on the nation’s vacant house issue, Detroit, Michigan, has spent more than $20 million since May 2009 to demolish almost 4,000 vacant properties.  And in Cleveland, Ohio, where the recession left one-fifth of all houses vacant, more than 1,000 have been razed and as many as 20,000 more are slated for demolition.  A recent 60 Minutes news story titled “There goes the neighborhood” documented Cleveland’s effort to deal with the spreading blight of vacant homes.  Abandoned houses have fallen victim to thieves who break in to steal fixtures, appliances, copper piping, and even the aluminum siding.

In an effort to rid themselves of near worthless properties banks are also calling in demolition crews and then donating the cleared land back to cities.  Not only do they clear their books of a property that costs them to maintain, they can get a tax write off through their donation.

The federal government recently announced a new plan to deal with foreclosed homes – selling properties held by Fannie May and Freddie Mac to investors for use as rental properties.   “The federal program is aimed to clear the backlog of distressed properties that has flooded the market and depressed prices, while at the same time meeting the increased demands of renters.”  Given that America is becoming a nation of renters, this might be a strategy that banks could use as well to offload some of their inventory of foreclosed homes.  The sooner these vacant houses are filled, the sooner home prices will stabilize, property tax revenues will increase, property crimes will drop, and neighborhoods will recover.

Well, now that we have some plans to deal with all these vacant, abandoned houses, maybe we could turn our attention to the plight of the homeless?

This entry was posted in economy, foreclosure, frugal living, homelessness, renters, underwater mortgage, vacant houses. Bookmark the permalink.

2 Responses to Nobody’s Home

  1. Rita says:

    I have one home that I rent out. It can take up to a year to find someone to rent it. It is 3 bedroom and 2 bath nice modular home. Very clean and well kept. Many come to look at it and end up moving in with relatives. This is Indiana and people are still losing jobs. They cannot spend $500. on rent when they have no income or just unemployment. I do not think this plan to rent all these houses will work at all. When people say they have no money they really mean it. Some families have moved in for a year, like it but had the opportunity to buy a falling down house with a low mortgage so they take that house. I don’t know the answer but I do know renting out a house is not the way.

  2. Amy says:

    In my city, if you call up city hall one of the options on the phone is “to report an abandoned building, press….”

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