Sunday, February 17, 2008

L.A. Times: Foreclosures lead to another problem: suburban blight

At first I thought this February 17 story by Chip Jacobs was a rerun of a story from last year, but not so! Blight, squatting, and rental fraud are apparently becoming hot topics.

I love this big burly realtor featured in this article - not many are gonna mess with him! He's been moving in to some of the foreclosed properties he represents, so that he can maintain them and keep out the riff-raff, literally. How many realtors do you know are willing to "go that extra mile?"

The problem is, there just aren't enough people like him to go around. Which kind of got me thinking. He is in effect renting the house from the lender who foreclosed the property. He's got an incentive to maintain the place because he wants to earn something selling the place. Given a rental situation, how does one incentivize the renter to maintain a place, instead of trash it? Maybe offer the renter a cut of the action when the place gets sold? That might work during boom times, but at the bottoms of the slumps, when everybody is pretty much assuming property prices will never rise, renters probably would figure their chance of a jackpot is too small to matter.

Studies cited in the article provided some interesting numbers. A study by the Georgia Institute of Technology and the Woodstock Institute of Chicago postulated that for each 2.8 foreclosures in a neighborhood with 100 owner-occupied homes, crime jumps 6.7%. The same researchers said that homes lose 0.9% of their value if they are within 1/8 mile of a foreclosure. Now I have images of Wile E. Coyote strapped to an anvil...

I should add, this time around, neighbors are being more proactive about foreclosure situations, unlike the early 90's. Some Homeowner Associations are hiring gardeners and repairmen to maintain landscaping, do minor repairs, and so forth, on neighboring empty homes.



Blogger bearmaster said...

It looked like there was a brief bounce in beach cities sales at the beginning of February, but the momentum may be faltering. I count 88 homes sold in the beach cities in February 2007. I think we might get past 70 homes this year, but it's difficult to say.

CAR is pinning its hopes on the recent boost in conforming loan limits and probably the upcoming Home Buyer's Fair. The L.A. Times is cosponsor. And no wonder - where is the newspaper going to get its advertising revenue if local real estate continues to spiral down?

12:14 PM, February 17, 2008  

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