An undersupply of houses in an area is bad, pushing up prices, but so is an oversupply. Aggressive plans to build housing units merit caution in the face of today’s uncertain demand. This month, AP reports how foreclosures and vacant homes are damaging neighborhoods:
CNNMoney reports what’s happening now in Slavic Village, a Cleveland neighborhood that leads the nation in foreclosures…
See also:
USA Today, 4/12/07: “Rising foreclosures reshaping communities”
…it’s not only home values that are being affected by the foreclosure crisis. When foreclosures rise, as they have in Waters Edge and other middle-class areas amid the meltdown of the subprime mortgage market, they can unravel the social fabric and reshape neighborhoods.
The crime rate can rise while the quality of the schools goes down. Homeowner associations can see their treasuries drained. Nearby businesses close their doors, and local tax revenue suffers.
…one study in the Chicago metro area found that each foreclosure costs the municipal governments there more than $30,000, according to the Homeownership Preservation Foundation. One foreclosure will shave up to 1.5% off the value of the other homes on the same block, Immergluck’s research found…
As homes fall into foreclosure, a neighborhood frequently turns more transient. Investors often buy homes in foreclosure and rent them out if they can’t sell them.
Condo Completions Surge While Demand Ebbs
House Prices to Drop Much Lower: Greenspan
As defaults surge on mortgages made to borrowers with spotty credit and adjustable-rate loans, more people are noticing that their neighbors are caught up in the meltdown…
“They’ve seen a lot of prostitution in the area, vagrants wandering in and out of the empty houses and drug activity,” said Officer Dakarta Richardson of the Atlanta Police Department. “Some people that I talked to are afraid to walk out of their homes at night.”
[A recent study by Dan Immergluck of Georgia Institute of Technology in Atlanta and Geoff Smith of Woodstock Institute in Chicago] showed that when the foreclosure rate increases one percentage point, neighborhood violent crime rises 2.33 percent…
The homeowners sometimes have no options but to accept any renters they can get, said Norm Schriever, a local real estate and loan agent [in California].
“You get some bad renters in there and the weeds start growing and a few windows are broken and it starts descending into a feeling of chaos,” he said.
Thieves also have looted some empty homes, stripping them of electrical appliances or valuable copper wiring and pipes that can be sold as scrap, he said.
Banks aren’t watching foreclosed properties closely, said Modesto, Calif., Police Chief Roy Wasden.
“As it gets colder, (squatters) will start building fires in these structures and it’s quite dangerous,” he said.
CNNMoney reports what’s happening now in Slavic Village, a Cleveland neighborhood that leads the nation in foreclosures…
When homeowners moved away after a wave of foreclosures in Cleveland’s working-class neighborhood of Slavic Village, crime took off…
According to Jim Rokakis, Cuyahoga County Treasurer, more than 800 houses now sit vacant and moldering in the area…
The first thing that happened after owners moved out of foreclosed homes in Slavic Village was that squatters and looters moved in, according to Mark Wiseman, director of the Cuyahoga County Foreclosure Prevention Program. “In the inner city, it takes about 72 hours for a house to be looted after it is vacant,” he said…
…When a house is derelict, people will dump garbage in the yard, rather than pay for haulage. Windows are broken, and doors are stolen, opening up the interior to the elements. In Cleveland’s cold and damp climate, the houses deteriorate quickly. But some not badly enough to keep drug dealers out…
Residents have tried to fight back, organizing neighborhood watch groups and lobbying the police, who, many feel, are too often missing in action…
But as the number of empty lots and abandoned houses grows where houses and residents were once packed in a tight community, there are fewer and fewer neighbors to fight the battle.
See also:
USA Today, 4/12/07: “Rising foreclosures reshaping communities”
…it’s not only home values that are being affected by the foreclosure crisis. When foreclosures rise, as they have in Waters Edge and other middle-class areas amid the meltdown of the subprime mortgage market, they can unravel the social fabric and reshape neighborhoods.
The crime rate can rise while the quality of the schools goes down. Homeowner associations can see their treasuries drained. Nearby businesses close their doors, and local tax revenue suffers.
…one study in the Chicago metro area found that each foreclosure costs the municipal governments there more than $30,000, according to the Homeownership Preservation Foundation. One foreclosure will shave up to 1.5% off the value of the other homes on the same block, Immergluck’s research found…
As homes fall into foreclosure, a neighborhood frequently turns more transient. Investors often buy homes in foreclosure and rent them out if they can’t sell them.
Condo Completions Surge While Demand Ebbs
House Prices to Drop Much Lower: Greenspan