by Bill McBride on 8/17/2014 10:59:00 AM
Sunday, August 17, 2014
Gretchen Morgenson writes in the NY Times: In a Bank Settlement, Don’t Forget the Bulldozers
[T]he sheer size of the Bank of America settlement makes it an enormous opportunity, housing experts say, to help the forgotten victims of the mortgage crisis. These are people who still pay their mortgages and property taxes but are caught in the devastating cycle that zombie houses can create in a neighborhood. Many of these homeowners, already poor, are impoverished further by blight on their streets.In January 2009, I proposed adding a demolition plan to the stimulus package. This would have helped remove blight from many areas, and would have employed many idled construction workers. I think this was a small missed opportunity.
“We had hoped that with these settlements we could bring down the number of never-to-be-lived-in houses,” said Jim Rokakis, director of the Thriving Communities Institute, a program of the nonprofit Western Reserve Land Conservancy that works to take over and repurpose vacant properties in the Cleveland area. “Vacancy rates are 15 percent or higher, all as a result of the crisis. Now it’s a matter of burying the dead.”
Mr. Rokakis’s organization also works with 22 county land banks throughout the state, nonprofit entities that take over distressed properties and sell them for nominal amounts to people who will rebuild on them or, more commonly, turn them into gardens or community spaces.
Studies show that bulldozing distressed properties reduces foreclosure rates in the surrounding neighborhoods and can improve the values of nearby homes. An analysis conducted for the Western Reserve Land Conservancy found that demolishing 6,000 homes in and around Cleveland between 2009 and 2013 helped slow the fall in property values, generating a net benefit in retained property values of $1.40 for every dollar spent on demolition.
Posted by Bill McBride on 8/17/2014 10:59:00 AM