Tear 'Em Down

As the foreclosure crisis drags on, it appears banks holding some of the foreclosed properties are taking drastic measures to lighten their burden.

As we've seen in Detroit, foreclosed and abandoned homes have been demolished. In a number of the hardest hit suburbs empty housing developments, some with hundreds of empty never-occupied homes, are being bulldozed to remove the need for the banks or the towns to maintain and police them. (Some of these upscale homes have turned into squatters dens, housing drug dealers and prostitution operations.)

The trend has been spreading, with a number of cities passing legislation to enable them to work with banks to demolish foreclosed properties that are unlikely to ever be occupied before they molder away from neglect. One of the latest to deal with this issue has been Cleveland.

The sight of excavators tearing down vacant buildings has become common in this foreclosure-ravaged city, where the housing crisis hit early and hard. But the story behind the recent wave of demolitions is novel — and cities around the country are taking notice.

A handful of the nation’s largest banks have begun giving away scores of properties that are abandoned or otherwise at risk of languishing indefinitely and further dragging down already depressed neighborhoods.

Four years into the housing crisis, the ongoing expense of upkeep and taxes, along with costly code violations and the price of marketing the properties, has saddled banks with a heavy burden. It often has become cheaper to knock down decaying homes no one wants.

As the linked article states, a number of other states and cities have passed laws allowing the same kind of operations to demolish distressed properties and ease the burden of supporting empty properties.

One area I predict will see such demolitions in the near future is the Las Vegas area. Entire neighborhoods sit empty, with street after street of new homes never sold and never occupied gathering dust and becoming the icon for a modern ghost town.

While not nearly as eerie as the modern ghost cities seen in China, it's still a sad testament to the housing bubble enabled by Congress with their weak oversight of Fannie Mae and Freddie Mac.