Monday, July 05, 2010

Foreclosures Still Plague Detroit Metropolitan Area

July 5, 2010

Foreclosures plague Metro area towns

Neglected properties, tax revenue losses strain Metro communities

The Detroit News

The pain of home foreclosure is spread throughout the region, from the poor communities wracked by unemployment to wealthier ones with empty homes in unfinished subdivisions, according to new data compiled by Southeast Michigan Council of Governments.

Causing trouble for homeowners and municipalities alike, the crisis is putting pressure on homeowners trying to sell, spreading fear among neighbors about neglected properties and challenging municipal leaders to address resulting blight with dwindling taxes.

"We deal with this every single day," said Frank Vaslo, the mayor of Lincoln Park, where an estimated one in 28 homes is in foreclosure. "Sixty percent of my time is spent on this."

Neighbors complain about abandoned pools and mosquitoes that spawn there, high weeds and the potential for crime at abandoned homes, Vaslo and others said. Lincoln Park spent $147,000 this past year maintaining other people's property.

It's little comfort for Vaslo that the foreclosure mess isn't rooted solely in Detroit and other economically distressed parts of the region. High foreclosure rates can be found in just about every corner of Oakland, Macomb and Wayne counties, including some of the most prosperous neighborhoods.

"It's happening everywhere," said Macomb County real estate manager Don Symons of Real Estate One. "It's in every price range."

New Baltimore, which is serviced by Symons' firm, has one of the highest foreclosure rates in Macomb County, with one in 21 homes in foreclosure. Many are big, sprawling new homes built without a dedicated buyer. Many sit on dirt lots, waiting for an owner and a landscaper.

It's a similar situation in Waterford Township, where one in 35 homes -- nearly 1,000 -- are in foreclosure. The township is spending more on cutting lawns and dealing with abandoned properties, Township Supervisor Carl Solden said. "It's been a struggle this year," he said.

Long a community tied to big manufacturing firms in Pontiac, Waterford Township is hit hard by the evaporation of thousands of well-paying factory jobs, and many of the vacant homes will likely remain empty, Solden said.

"The availability of homes is so great. There's no demand," he said.

In response, the township took its share of federal neighborhood stabilization money and created a down payment assistance program. It has put 40 families in previously foreclosed homes. If they make payments and live there a certain amount of time, the grant will be forgiven.

"That's 40 homes that are off the foreclosed list," Solden said.

But Solden is well aware of a longer-lasting problem: Foreclosures have triggered a steep decline in property values and a drop in tax dollars. Township tax revenues are expected to decline $4.1 million next year, prompting deep cuts in services, he said.

"This is scary," said Solden, who was a township police officer for 32 years before becoming supervisor in 2000. "I've never seen anything like it."

According to SEMCOG's numbers, Detroit led the region in foreclosures, with more than 12,200 properties owned by lenders. Because the regional planning agency calculated every community's rate using the estimated number of housing units, Detroit's rate -- one per 28 homes -- isn't as high as others.

But John Nutting of SEMCOG said Detroit is a unique case because many of the foreclosed units are ultimately taken over by the city, county or state and not returned to the housing market. He said a better measure for Detroit might be the number of occupied households, which SEMCOG estimates at 246,447, far below the city's 341,554 housing units. If occupied households are used to calculate Detroit's rate, it jumps to one in 20 homes.

SEMCOG has tracked foreclosures for less than a year and has contracted with a private service to get the data from courts. Nutting said the agency's research shows problems are widespread even if the causes are different.

"You kind of had multiple patterns occurring simultaneously," he said. "If you look at the region as a whole, a fair chunk is suffering for some reason or another."

In some communities, the foreclosures were rooted in job losses. But in some outer ring, fast-growing suburbs, he said developers got ahead of the demand. "What you had in those areas was overdevelopment," he said.

As communities continue to struggle with a glut of vacant foreclosed homes, many wonder if the end is in sight. Lincoln Park's Vaslo believes it could be years before the constant fear subsides. But Symons is basking in the glow of a good couple of months. He's hopeful that it's getting better but wouldn't bet the house on it.

"Time will tell," Symons said."> (313) 222-2563

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