The Observation Deck

According to the Cuyahoga County Foreclosure Database, foreclosure cases were filed on 413 properties in the 44107 zip code in 2007. More than 100 Lakewood streets are listed. (You’ll notice that a few non-Lakewood streets are included in the database – West Blvd., W. 100th, etc.)

http://www.cleveland.com/news/foreclosu ... 8560040783

If this isn’t the preeminent issue for our city, well, then …

The national foreclosure “crisis,â€Â￾ as it’s being termed, seems to be something that will be with us for many years and perhaps a decade, as opposed to an economic downtrend which last from a few quarters to a couple of years max.

Although I have not seen any signs of such, I am hopeful that our new administration and council is truly taking this issue to heart and is studying the impact on trends in housing and commercial property values, potential city and school district property tax income loss, income tax receipts, others, and the probable implications on short- and long-term budget forecasts and potential need for proactive public policy.

I’ve routinely bored Observer readers for a couple of years with my opinion that Lakewood’s housing stock is our single biggest and, potentially, best asset.

Is anyone concerned?

David

Well your neighbor is for one.

However I have to disagree with some of what you have laid out. This economic downturn is here for a long time. So is the foreclosure problem.

In the past we have had many things to pull us out of decline, now what do we have? Industry, gone. Service jobs, gone. Tech jobs, gone. Homes gone. Dreams, gone, Future gone.

Except, for one small group that saw this coming...

.

It would be informative to know how many of the foreclosures are for rental properties. I've read that a large part of the apparent problem is people who borrowed beyond their means to buy rental properties, with the attendant tax breaks, and are now in trouble because a tenant left, or their adjustable rate adjusted. Credit counselors, who are not highly paid, have noted that the people who attend their sessions often come in luxury cars.

I would suspect that a landlord stretched this thin is probably not doing much to keep his property up, and if that property is seized and sold to someone who is more responsible, the result would be a plus for the community.

I think much the same argument can be made for owner-occupied properties. There is a lot more to owning a house than just paying the mortgage, especially houses as old as we have in Lakewood. So if someone really strained to get the biggest house they could with a subprime loan, or even an adjustable rate loan, what do they do when the washing machine breaks and the paint starts peeling. Too often they lack the resources to deal with such continuing expenses, and the property is not kept up, values decline, and the neighborhood deteriorates.

Unfortunately, our government has a pollyanish policy that we should all own homes, and has made mortgages too easy to get, so people buy homes before they have the financial strength to care for the property.

I'm not sure what local government can do, beyond stricter enforcement of the code, and that will end up driving out more and more overextended people. That will lead to more vacant houses, but at the same time the lower prices should attract new residents who, one would hope, would be more able to maintain the home if they bought it for less; bad news for those of us who remain, but I think I would be willing to give up some of the paper profit in my home if the neighborhood could be protected. Strict code enforcement should help to keep slumlords from buying the vacant homes and renting them while they run them into the ground.

Will,

Very good post. The only thing that concern me about homes going to foreclosure and sheriff's sales are that the property values around them decrease incredibly and often the homes are flipped, although I don't think there is much of a business these days for flipping, which is why more homes are empty. It is such a double edged sword.

There should be classes people have to take before they buy their first home! I know I will be stoned for saying that, because everyone is "supposed" to have common sense, but as we see, they don't. Don't you wonder how different the country would look if real classes on parenting and home buying and credit card/check book balance were taught? Things have changed a lot in this country and we do have to go back to basic values, living within our means, not immediate gratification. No legislature can fix that though.

I do hope Lakewood comes up with their own unique incentives for home buying and starts cleaning up the several slum landlords we already have.

Interesting thoughts, everyone.

Will, I plan to call Lakewood's housing department to see if any work is being done to identify how many foreclosed properties fall into what category - owner occupied, duplex, triple, apartment building (four or more units). In my opinion, that office has always taken its obligation in sharing this type of information very seriously.

Also, there are a number of properties not on the active foreclosure list because they were likely processed in 2006. Cannon Avenue, as an example, has two empty homes with “For Saleâ€Â￾ signs in the front yards. One is literally falling apart and has an asking price of around $55,000.

I'm not sure what local governments can do either. Perhaps they can force the banks that own vacant decaying “For Saleâ€Â￾ properties to keep the properties up to code.

How many properties, total, are there in Lakewood and what percentage of properties does 413 represent?

It would be interesting to know.

I'm not sure if I would buy into the idea of the city buying substandard properties; it could turn into a scheme where people buy a property and let it deteriorate in order to get cash from the city. On the other hand, if the city was very aggressive in levying fines and collecting taxes, perhaps such a program could work. It would take political leadership of exceptional courage, and I can't think of a politician I know who would be able to stand the pressure once people started whining about being dis-entitled.

Tearing down the property would just decrease the tax income from the property, while increasing city expenses as they would have to maintain the lot, which would probably end up as a semiprivate park for the neighboring homeowners (can I volunteer my neighbor's house?) Actually, we could stand a few parking lots on each street, but still the city would have to maintain them.

I would argue against programs where the city provides assistance to rehabbers, or new owners who would agree to rehab. These are the types of programs that made a major contribution to our current problem, especially as the government agencies seem to lack the staff and incentive to check out the property and see if it is actually being rehabbed. I know a house in my neighborhood was bought in a distressed status by, I believe, a firefighter. He and his family descended on the vacant home and did cosmetic repairs, but I would say what they did was of marginal quality, not what one would want in one's own home. They then sold the house at a healthy profit, and it must have worked out well, as the buyers have now been there for quite a few years. That was done without government assistance. I've heard of other rehabs done under government auspices, and they don't seem to have as good results.

I like the idea of the city taking ownership of abandoned property, rehabbing it, and selling it. It increases the tax income from the property, and, done right, could make jobs for local residents. I like this because it ties in with one of my criticisms of our school system, which is that we seem to evaluate our schools based on how many engineers, poets, and other sundry college graduates we produce, when the most valuable jobs today for most of us are in the trades. Think of it: they can outsource engineering jobs to other countries, but you can't outsource plumbing, or HVAC service, or painting and plastering (in this day of drywalling, I think a skilled plasterer could write his own ticket; if you know one, give me his name). So I would set up a program with the unions, and the schools, where students could rehab houses as part of their training. Students would do the work, but with close skilled supervision. We could even pay them. I don't have numbers, but I suspect that the profits from selling the restored homes would more than cover the costs of the program. but the greatest benefit would be in the training and in the restoration of our housing stock.

Lakewood's Housing Unit Profile

According to our Housing Department:

Apartments/Condos/Single and Doubles Above Store Fronts –
984 buildings comprising 12,827 total units

Single Family Homes –
9,318 (389 are rentals)

Doubles –
3,231 (1,739 have an owner in the house)

Triples –
327 (no figure available on owner occupied)


So, adding all apartments/etc. to all singles, doubles and triples without an owner in the house (3,192), it appears that 12.9% of these structures have active 2007 foreclosure cases. This percentage jumps to 18.5 when considering 2006 and 2007 cases.

Thanks David -

That's a huge percentage rate.

These figures do change rapidly however, which may indicate the problem is not long lasting.

When the sub-prime implosion began, I saw an article listing the zip codes that had the highest foreclosure rates. California led the country. Since one of my sons lives in California, I called him to rub his nose in that, I mean to commiserate. We even speculated that a lot of the property damage caused by their recent forest fires was, perhaps, related to owners being overextended and finding an easy way out. Today, I saw a similar list, and California was almost unrepresented, the Las Vegas area having taken the lead. I think on today's list, the only local zip code represented was 44105.

My point is that the problem seems to almost solve itself, with new buyers seeing bargains and buying the properties, with the exception of those neighborhoods that are old, with small lots and vandalized homes. I suspect many of those neighborhoods don't even show up as having a lot of foreclosures, as the properties are virtually abandoned. Personally, I'm urban by nature, and I like living where I can walk to where I want to go, but I think most people would prefer the larger lots of suburbia, and would not consider a lot of the neighborhoods in Lakewood, were it not for our good municipal services, schools, and convenient commuting to one of the down-town jobs that has not yet moved to the suburbs.

It's really difficult to get hard and fast numbers on this. RealtyTrac.com indicates that currently for 44107:

417 properties are in pre-foreclosure;
264 are in auction; and
622 are bank owned.

I think these numbers/properties are not included in the 2007 foreclosure list provided by The Plain Dealer.

With 622 properties identified as bank owned, shouldn't Lakewood be applying pressure to keep these up to code? How can banks be allowed to let houses simply crumble to the ground? To your point, Bill, regarding delinquent taxes, these 622 better be paid up, no?

Are there any public officials out there? "Bueller ... Bueller ... Bueller."

Will Brown wrote:These figures do change rapidly however, which may indicate the problem is not long lasting.


My point is that the problem seems to almost solve itself, with new buyers seeing bargains and buying the properties, with the exception of those neighborhoods that are old, with small lots and vandalized homes. I suspect many of those neighborhoods don't even show up as having a lot of foreclosures, as the properties are virtually abandoned. Personally, I'm urban by nature, and I like living where I can walk to where I want to go, but I think most people would prefer the larger lots of suburbia, and would not consider a lot of the neighborhoods in Lakewood, were it not for our good municipal services, schools, and convenient commuting to one of the down-town jobs that has not yet moved to the suburbs.

When people see bargains in CA and Las Vegas they will bite, but not our area. There are bargains all around and most aren't being bought. Lakewood in my opinion is one of the most attractive cities because of all the things you mentioned and you can afford a nice house for under two hundred, but the area itself does not and will not any time soon, lend itself to a rush in buying up property. Airlines are now charging for a second bag when you fly, Allstate just called to say they have to raise the insurance even though we haven't had a claim in 9 years, due to the catastrophes around the country, everybody is losing money and reaching to the rest of us to supplement it.

I love your ideas Will and wish you were with the committee in Lakewood, if there is a committee!