Why Do People Abandon Houses?

One of the most significant contributors to the abandonment of houses is a general decline in the local economy. This economic downturn often leads to higher unemployment rates, making it impossible for residents to maintain their mortgage, tax, utility, and other upkeep payments. Consequently, many are forced to move to areas where they might find employment, but their abandoned residences remain.

Moreover, if no one else can afford the home or it fails to sell for an amount that would cover the mortgage, abandonment becomes the only feasible option. This scenario is exacerbated as abandoned houses start appearing in a neighborhood, leading to a decline in property values and a ripple effect on the surrounding community.

Why Don't Local Governments Reclaim Abandoned Houses?

Local governments often have the legal authority to reclaim properties that fall into tax arrears, but the process is not as straightforward as it might seem. For instance, if a property owner fails to pay taxes, the city can sell the property to recover the arrears, often leading to conflicts with utility companies and mortgage holders.

Consider a scenario where a mortgage holder holds a lien on an abandoned house. The bank is still entitled to the interest generated by the mortgage, and it might be more cost-effective for them to pay the tax bill to prevent a foreclosure. In this case, they can keep the property without facing legal liability for the taxes, as the legal owner remains responsible for them.

The Challenges of Reclaiming Abandoned Properties

Even when local governments attempt to reclaim abandoned properties, they often face significant challenges. For example, if a property is repossessed due to a default, the city becomes the legal owner and is now responsible for utility bills. Additionally, any remaining mortgage must be paid off before the property can be sold. If the mortgage can't be paid off, the property cannot be sold at all.

In many instances, abandoned houses can be stripped for any valuable components, and valuable plumbing fixtures like copper pipes are frequently targeted due to their high resale value. This process leaves the house uninhabitable, often making it cheaper to demolish and start over rather than repairing it. The cost to demolish a home can range from $4,000 to much higher, especially if the property is part of a larger demolition project.

Case Studies and Solutions

Detroit, Michigan: The City of Detroit has struggled with a shrinking population and little employment, leading to a significant number of abandoned properties. To address this issue, the city has established the Landbank Authority, which administers all city properties. With over 100,000 parcels, this system aims to manage and potentially redevelop these areas. However, the city's budget constraints limit its ability to provide tax breaks or even sell land at a discount, as it cannot afford to offer incentives.

Buffalo, New York: The abandoned Wonder Bread factory, which was once a symbol of industrial prominence, has become a major challenge for the city. The factory closed in 2004 due to a decline in white bread consumption. Properties like this factory are often entangled with private ownership, where the land owners continue to pay taxes in hopes of eventually offloading the property.

In both cases, cities are faced with the daunting task of balancing economic development with the need to clear abandoned properties. Innovative solutions, such as public-private partnerships and targeted urban renewal initiatives, may offer a way forward, but these approaches require significant coordination and resources.