Several American cities have been buying up foreclosed and abandoned homes, refurbishing them, and selling them quickly to developers and homeowners. Boston, San Diego, and Minneapolis are using the idea, which both helps prevent troubled neighborhoods from deteriorating further and addresses the shortage of affordable homes for the local workforce.
Former Seattle Mayor Charles Royer, chair of the new Middle Income Housing Alliance addressing the shortage of workforce housing in Seattle, thinks this is "a great idea. Very affordable homes could be purchased, say, with housing levy money, owned by a non-profit, and rented out or sold to qualified low-income buyers. Some homes could even be group homes."
In these other cities, money is assembled from local and federal taxpayer sources as well as private money such as the California Teachers Retirement System and Washington Mutual, who have committed $20 million to the San Diego effort. A new housing bill in Congress set aside $4 billion in federal grants.
Free market advocates, including the Bush Administration, want to let the market find buyers for these homes, but many mayors think the market moves too slowly, particularly as banks are overwhelmed. Developers will tend to sit on foreclosed properties they buy, warns Royer, dabbling at repairs or waiting for the values to improve before selling them. That has a bad effect on the neighborhoods, where dilapidated homes can be magnets for crime and further depress real estate values. Also, putting people to work in fixing up these homes can help create jobs in the recession.
For cities with shrinking populations, like Cleveland and Detroit, officials are also demolishing run-down homes, turning the land into small parks, side yards, and refurbished homes. Boston not only fixes up the foreclosed homes it buys at a bargain, but also beefs up street cleaning and police patrols in the targeted neighborhoods. Michigan is land-banking thousands of properties, gradually selling them to developers or finding other uses for the land.
You would think that Seattle, with its acute problems of housing affordability, would be a leader in this effort. Royer's task force is a good sign, but it's finding the usual slow going in process-minded Seattle. It got passed a multifamily property tax exemption, to stimulate more construction, though it ended up too targeted at low-income housing, not workforce (or middle class) housing. Another effort, to create a demonstration project around one of the Rainier Valley Sound Transit stations, is stalled in City Council, with some members wanting to go through a years-long neighborhood planning process first. A legislative package is being prepared, providing some tax exempt money for transit-oriented development, and the support of Speaker Frank Chopp is encouraging.
A major stumbling block in Seattle for creating enough affordable housing is the resistance of nearly every neighborhood to dramatic change. Another is the difficulty of providing carrots (parks, transit, boulevards) since other neighborhoods complain if they don't get equal treatment. By contrast, the program for acquiring scattered foreclosed homes softens the impact. It doesn't make a major impact, but, as Royer says, "every increment helps."