Cleveland as Harbinger of Things to Come?
Images from slideshow by Reuben Cox for the New York Times
We can talk, as we do, about the value of the infrastructure in rust belt cities and what great opportunities there are, (see The Move to Detroit for the $100 House) but in fact, in many of those cities the situation is now completely out of control. In Cleveland, which has lost half of its population in the last 50 years, there are as many as 15,000 empty houses.
According to Alex Kotlowitz in the New York Times,
Most of the vacant houses are owned by lenders who foreclosed on the properties and by the wholesalers who are now sweeping in to pick up houses in bulk, as if they were trading in baseball cards.
The real scandal in the article is that so much of the damage was exacerbated by flippers and scammers. One example:
He would buy a distressed property and, at best, make nominal repairs before quickly selling it for three or four times what he paid for it. The flips needed the cooperation of appraisers and the gullibility of home buyers. But the proliferation of mortgage companies — mostly based out of state and willing to provide loans with little documentation — also facilitated flippers.
Predatory lenders would pounce on families, offering money to do improvements or pay off their debts, and pretty soon they were under water and out of their house. Then the scavengers would move in and take all the copper and plumbing.