The Washington Post had a fascinating article yesterday about how banks are responding to one city’s foreclosure crisis:
Cleveland — The sight of excavators tearing down vacant buildings has become common in this foreclosure-ravaged city, where the housing crisis hit early and hard. But the story behind the recent wave of demolitions is novel — and cities around the country are taking notice. A handful of the nation’s largest banks have begun giving away scores of properties that are abandoned or otherwise at risk of languishing indefinitely and further dragging down already depressed neighborhoods.
This closely mirrors the approach that Youngstown, another Ohio city, has taken to their dwindling population:
Even when the result is an empty lot, it can be one less pockmark. While some widespread demolitions could risk hollowing out the urban core of struggling cities such as Cleveland, advocates say that the homes being targeted are already unsalvageable and that the bulldozers are merely “burying the dead.”
However, unlike in Youngstown where that city is simply trying to shrink to a manageable size, the Cleveland demolitions are already leading to redevelopment:
The demolitions in some cases have paved the way for community gardens, church additions and parking lots.
For good or ill, this looks to be a growing trend for some time. The article notes that New York, Philadelphia, Georgia, and others have or soon will pass laws similar to the ones Cleveland used to authorize its land bank and teardowns. Unfortunately, there doesn’t seem to be any shortage of foreclosed property candidates:
At the end of August, the nation’s banks, along with Fannie Mae and Freddie Mac, had an inventory of more than 816,000 foreclosed properties on their books waiting for a buyer, according to RealtyTrac. An additional 800,000 are working their way through the foreclosure process.
H/t to the ABA Journal for the original link pointing me to the Post article.