Mortgage foreclosures and vacant and abandoned properties have a spillover effect on appraisals, reinforcing the downward pressure on prices. Vacant properties also become targets for vandalism, theft or arson. The longer properties sit vacant, the higher the cost to the community at large.
Because the foreclosure process varies from state-to-state, the length of time from a first delinquency notice until the property becomes REO (real estate owned, when title is transferred to the lender at the end of the foreclosure process) can be from a minimum of 40 days up to one year or more. REO properties can languish longer in both weak and strong housing markets because of tighter credit conditions for the average buyer.
The numbers are sobering. There were approximately two million foreclosures in each of the years 2009 and 2010. A significant number also are predicted by the end of 2011. The resulting number of potential additions to the inventory of REO properties, according to research by Amherst Mortgage Insight, is estimated at upwards of 7 million properties nationwide.
Local governments are not powerless to prevent this problem. There are strategies that may be implemented in order to prevent properties from abandonment. These include:
- Vacant property registries
- Artistic boarding
- Liens and fines to accompany tougher code enforcement
- Purchase and resale to occupants or tenants
- Conversion to rentals
- Stay Put Notice
Resources
Jackson, Mich., Seeks to Eliminate Blight, Vacant Properties (February 27, 2012)
Difficult economic times have forced cities to embrace their creativity and develop innovative methods for addressing challenges. The City of Jackson, Mich., has begun to explore a number of initiatives, such as form-based codes and shared-service agreements to improve efficiency throughout its local government. Strengthening the interactions among the city’s staff is also at the core of the problem-solving approach in Jackson.
Screaming for Housing Demolition (February 16, 2012)
n a country that cannot adequately house all of its citizens, both government and private-sector actors will bulldoze more than two million homes in the time before us. Implemented on a vast scale already thanks to dollars from the Neighborhood Stabilization Program (NSP), the pace of demolition will quicken as the winter months recede.
Citiesspeak is the official blog of the National League of Cities.
Vacant Properties Complicate the Foreclosure Crisis (September 20, 2010)
Although city and town leaders are taking steps to help prevent foreclosures and stabilize neighborhoods, they still need to implement a plan to manage vacant and/or abandoned properties. This article suggests eight strategies to prevent properties from becoming vacant or from falling into disrepair. To read more, see Vacant Properties Complicate the Foreclosure Disaster on Citiesspeak, the official blog of the National League of Cities.
How Can Municipalities Confront the Vacant Property Challenge?
A collaboration between the Chicago Metropolitan Agency for Planning, the Metropolitan Mayors Caucus, and Business and Professional People for the Public Interest produced a report in March 2010. The brief offers nine tools to respond to the challenge of vacant and abandoned properties in the context of the home mortgage foreclosure crisis.
Mayor Announces “Vacants to Value” Plan to Reduce Blight (Baltimore, Md., November 3, 2010)
An initiative to trigger rehabilitation of more than 1,000 vacant buildings and leverage $70 million in private investment: The City of Baltimore has an integrated effort to reduce vacant housing and urban blight. As a result of one of the largest percentage declines in population among major U.S. cities from 1950 to 2000, Baltimore is challenged with approximately 16,000 vacant buildings, roughly 25% of which are city owned. Baltimore Housing estimates that more than 5,700 of the vacant structures are in areas with existing or emerging development demand.