Monday, December 22, 2008

Collateral damage

One of the most frustrating things about the real estate bust is the condition is has left so many in-town neighborhoods that had been up-and-coming areas.  For a little while earlier in the year, I was over in Capital View pretty regularly.  I would walk around the neighborhood and every street would have multiple "for sale" signs and boarded up windows indicative of foreclosures.  The AJC surveys the carnage:
Empty new homes can be found across southwest Atlanta, which has seen values fall through the floor because of foreclosure, mortgage fraud and abandonment.

Southwest Atlanta includes ZIP code 30310, the top in Georgia for foreclosure filings.

Current listings show a house on Wech Street — a 3-bedroom, 2-bath ranch home advertised as in “move in condition” — available for $24,900.
My agent friends who have money saved up are buying houses for this much.  I have friends who bought in southwest Atlanta two years ago who want to know what this all means, and I don't have any good ideas.  An absolute best case scenario would be for the revitalization of these areas to simply get put on hold, but I think things are getting worse.  The AJC article makes note of the fact that these vacant homes attract vandalism and squatters, which is what I'm hearing annecdotally from my friends in Reynoldstown.

The combination of factors hitting these areas is brutal.  First, all the subprime mortgages that got people into these homes in the first place reset and foreclosures follow.  Housing prices plummet, and you might think there would be a wave of people who could get into some infill homes for a great price.  However, tighter credit standards are going to prevent people from getting loans, and the cratering economy will further depress things.  So these homes will just sit empty for who knows how long.

The city has received $12 million to buy foreclosures, but it will barely make a dent in the problem.  I don't really know what sort of policy solutions are available.  There needs to be an infusion of capital somewhere to buy these houses and get them occupied.  I know some folks who are buying up cheap houses (~$30k), renovating them, and renting them to people with Section 8 vouchers.  The problem is that this is not a recipe for revitalization.  Instead, it can become a recipe for concentrated poverty and can prevent new residents from wanting to move in.  I'm not enthusiastic about an infusion of capital of this sort, but it is probably the only sort of private capital available.  

Anyway, none of it is good news for Atlanta neighborhoods.  I noticed in the city's infrastructure wish list* a line item for hiring 200 police officers at a cost of $20 million.  We have been trying to hire those officers for about a decade, but that is at least a starting place for getting a handle on the situation.  

*(Interestingly, the wish list linked above differs from the one left in the comments section the other day.  It includes streetcar funds, among other things.  h/t to Thomas Wheatley and commenter Juliea for the links.)

3 comments:

  1. What happens when wish list items (such as "Renovation of 25 Neighborhood Recreation Centers") are funded through the stimulus, but unable to operate post-stimulus? Once the $39,500,000 are spent and 395 jobs are created... are we just hoping that the City will have the money in the budget to actually operate these now newly renovated Rec Centers?

    Here's to optimism in 2009...

    ReplyDelete
  2. That's a great question and one which I'm sure whoever doles out the funds — be it the state, MPOs, cities or counties — will take into account.

    Has Obama said whether he wants the chosen projects to spur the economy in the long-term by turning them into revenue-generators, or just by the very act of putting people to work on them?

    ReplyDelete
  3. More often than not, I hear people talking about the problems with Section 8 and "concentrating property." The deal is, NOBODY is building affordable housing for working or lower class residents, especially not outside of Southwest Atlanta.

    True, concentrating these residents there won't help these communities, but where else are they supposed to go? What area North of North Ave. is actively finding ways to provide affordable housing and creating mixed income communities, beyond the hidden and lackluster quantities accounted for through law?

    ReplyDelete

Note: Only a member of this blog may post a comment.