Vacant Properties: Growing Number Increases Communities’ Costs and Challenges

Source: U.S. Government Accountability Office, GAO-12-34, November 2011

From the summary:
According to Census Bureau data, nonseasonal vacant properties have increased 51 percent nationally from nearly 7 million in 2000 to 10 million in April 2010, with 10 states seeing increases of 70 percent or more. High foreclosure rates have contributed to the additional vacancies. Population declines in certain cities and high unemployment also may have contributed to increased vacancies. However, these data do not indicate the number of vacant properties that are inadequately maintained and imposing costs on local governments.

If a homeowner abandons a property, servicers may have the right under typical mortgage agreements to conduct certain maintenance, although they generally are not obligated to do so until they assume ownership on behalf of the loan owner after foreclosure. In 2010, the GSEs reimbursed servicers or vendors over $953 million for property maintenance costs. However, local governments reported spending millions of dollars—including federal funds—on vacant properties that are not adequately maintained. For example, Detroit spent about $20 million since May 2009 to demolish almost 4,000 vacant properties. Unattended vacant properties produce public safety costs and lower communities’ tax revenues due to the decline in value of surrounding properties, with some studies finding that vacant foreclosed properties may have reduced prices of nearby homes by $8,600 to $17,000 per property in specific cities.

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