Vacant homes spread blight in suburb and city alike

Some 44.5 million homes in the US now stand next to an empty house, resulting in a drop of at least $5,000 in property value per house. By that calculation, a total loss of home value of $220 billion across the US can be attributed to the vacancy problem.

"This is a man-made disaster that's had more dramatic impacts on real estate markets than natural disasters [have]," says Bruce Katz, a housing analyst at the Brookings Institution, a think tank in Washington. "In a way, we have a lot of mini-Katrinas across the country."

Banks and other mortgage lenders acknowledge they've been overwhelmed by the sheer number of foreclosures, finding themselves ill-equipped to be long-term landlords of so many properties. But they say the problem is complex, and that a long foreclosure process and the fact that people walk away before trying to work with lenders to rescue their mortgages also play into the dereliction of many neighborhoods. Last year, mortgage lenders helped 889,000 families avoid foreclosure and stay in their homes, according to the Mortgage Bankers Association website.

"You can guarantee that none of our members wants to be a landlord," says John Mecham, a spokesman for the Mortgage Bankers Association in Washington. "Of course, we can also see where local officials are coming from – abandoned and distressed properties are not only a blight, but they drive down property values for entire neighborhoods."

On Drummond Street

One such place is Drummond Street, in the shadow of Clark Atlanta University. On what was once a lively street, half the bungalows and shotgun-style houses are boarded up, with trash strewn about. Here, as elsewhere, the falling market has pierced holes in inflated appraisals used to write mortgage notes.

Bobby Todd, who has lived here 35 years, now sweeps sidewalks and trims hedges around the empty homes next to his. The mostly young, college-educated speculators bought new pickup trucks with money that he says should have gone into fixing up the houses – and then left when the market tanked. Mr. Todd himself is out nearly $7,000 in carpentry work he did on the homes.

"They thought they could come make a profit, but they didn't and they just left it," he says. "I'm an old man, and now I'm working for free."

Farther down Drummond Street, a vagrant moved a bed, a bureau, and other furniture into a boarded-up bungalow, and eventually started a fire that nearly burned the house down, say Joe Strotter and Bernice Roberts, owners and managers of the property. They've now found a tenant but are waiting until move-in day to replace stolen appliances. "People watch, and when they see a house stand empty for a while, they either empty it out or move in," says Mr. Strotter.

Boarded-up homes are an expensive problem for Atlanta, which has already posted "no trespass" signs at as many homes this year as in all of last year. Vandals break in and pilfer copper wire and kitchen fixtures. Then vice moves in, including prostitution and drug dealing. In Charlotte, the overall crime rate has remained flat, but crime in several new but mostly empty suburban areas rose by 33 percent from 2003 to 2006.

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