Fixing The Foreclosure Crisis
Although residential mortgage foreclosures have wreaked havoc on many communities in metro Detroit and Michigan, efforts to stem the damage and boost property values are under way. But do the relief programs go far enough?
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On a related front, a pilot program coordinated by the Michigan Association of Realtors had sales pending or had closed on 94 of 100 previously foreclosed or abandoned homes that had been renovated in Wayne, Oakland, and Macomb counties (as of August).
Participating communities included Eastpointe, Ecorse, Ferndale, Hazel Park, Holly, Inkster, Keego Harbor, Lake Orion, Oak Park, Ortonville, Pontiac, Redford Township, River Rouge, Royal Oak Township, and Westland. The coalition contracted with Home Renewal Systems Inc. in Farmington Hills to either demolish, build, or refurbish the properties and then market and partner with local real estate agents to sell the homes.
“Our idea was that if we could support our struggling communities dealing with the devastating effects of foreclosures, we could also support the home values within those communities,” says Shannon Morgan, vice president of Home Renewal Systems. Tracey Katzen, daughter of longtime homebuilder Bernie Glieberman, started the effort in 2008. “This program addresses the blight of having unoccupied and deteriorating homes that lower home values and tax revenue, and would otherwise be the subject of speculative sales that turn into rentals, which can further hurt a community,” Morgan says.
In communities such as Detroit, Inkster, and Pontiac, hundreds of formerly foreclosed homes have been purchased at rock-bottom prices and turned into rental properties.
“With rentals you generally have minimal investment into the rehabilitation, (and) tenants often don’t take the time and effort that a homeowner would in contributing to the community,” Morgan adds.
SEMCOG’s Vettraino agrees. “In general, renters don’t have the same stake as a homeowner, the properties are not maintained as well, and the values are lower,” he says. “The problem is that many communities were designed for single-family, owner-occupied neighborhoods.”