Monday, February 18, 2008

Squatters Flocking to Foreclosed Homes

Last month I wrote about how some banks were trying to sell their foreclosed homes at auction, but they weren't getting the prices that they wanted for them, so they'd just let them sit. In a declining housing market, I thought that was a bonehead move (they're not going to get any more valuable, but today on there was an article about squatters living in foreclosed homes. Yet another reason that the banks should be selling their foreclosure inventory rather than sitting on them.

Not all of these people occupying foreclosed homes are nice families who just got down on their luck one day and lost their places to live. Some of these vacant homes are being taken over by prostitutes and drug dealers. Just what your average suburban family wants living next door, right? One person interviewed for the article said that she was living in abandoned homes because she kept getting kicked out of shelters for violating the rules of the shelter (i.e. no drugs).

I don't have a problem with the homeless in general. I've met some very nice people who were previously homeless. My brother was once friends with some nice boys that were homeless. The church that I used to go to had homeless dinners.

However nice the homeless people are that are occupying these houses, it can't exactly be a good thing for the value of the home. Is having a crack-house operating out of a home going to make you want to jump for joy and bid up the price of a house at auction? I don't think so. Even if you get a nice person squatting in the house, there is the potential for damage to the house, as people try to keep warm by lighting fires, or have light by lighting candles. Homeless people also don't have as much access to things like curbside trash pickup. While I'm sure many clean up after themselves and don't make a mess, the likelihood is that many squatters don't pick up the trash before they move on to another home.

The sad thing is, there are more foreclosed homes in some areas than there are homeless people. In Cuyahoga County, Ohio, there is an estimated 4,000 homeless people, yet 15,000 foreclosed homes remain vacant.

So it leaves me scratching my head wondering why businesses won't sell these homes at what the market will bear for them. They're probably just being greedy, don't really want to cut their losses, but if it's greed, it's not helping them. Houses do not increase in value when they are occupied by homeless people, whether they are nice, or whether they are operating a crack house out of it. Neighborhoods do not increase in value when someone is running a prostitution ring out of a nearby abandoned house. Homes do not increase in value during a declining market. It's common sense.

No comments: