The New America: Home Demolition Rises as “Solution” to Housing Crisis
Foreclosures continue to increase across the country. They grew last quarter, with 610,337 filings (that averages out to almost 2.5 million annually). This change in direction suggests a new uptick in foreclosure activity. New default notices also increased 14%. And the foreclosure backlog continued to pile up, because banks cannot prove ownership of many of the homes.
Perhaps in reaction to this, banks are literally demolishing foreclosed properties rather than trying to keep homeowners who want to stay there in the home.
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.
The banks have even been footing the bill for the demolitions — as much as $7,500 a pop. Four years into the housing crisis, the ongoing expense of upkeep and taxes, along with costly code violations and the price of marketing the properties, has saddled banks with a heavy burden. It often has become cheaper to knock down decaying homes no one wants.
The demolitions in some cases have paved the way for community gardens, church additions and parking lots. 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.”
I’d rather see a community garden than a blighted property. And if the banks are paying for the demolitions, at least it’s better than refusing to pay for the upkeep of a vacant home. But this is an action rooted in total failure. As Matt Yglesias shows, housing starts are down massively, far more than they were elevated during the bubble years. Construction companies and developers aren’t building new homes, but this is not because we’ve had some huge decay in the population. It’s because people cannot afford new homes, because their wages have fallen and they’ve lost their jobs. The answer to this is not to artificially prop up the housing market by reducing supply through demolition, it’s to improve the economy, pay people more and get demand to a level that stabilizes the market.
At the very least, we could arrest the need for home demolition in the first place by allowing people who want to stay in their homes the opportunity to rent. The Irish government is giving this a try. Ireland had a very similar housing bubble and bust, and they see right to rent as a way to stabilize communities and help homeowners. Instead, we’re kicking people out and blowing up the homes for no reason afterward.