Land Banks Could be the Answer to Foreclosure Woes of Detroit
The auction of foreclosed units appeared to present an even grimmer scenario than initially noted. In Wayne County 9,000 REOs were put up for auction recently. 80% of these failed to attract any bidder although the minimum bid was allowed to be $500.
It is nothing new that Detroit and Cleveland are cursed for some time with foreclosures. But the incident at the Detroit auction has been an eye opener to the intensity of the problem.
The auction was far from smooth. Speculators from out of the town plucked the cream properties like the ones located in Boston-Edison region. The locals were not allowed to register for these bids. This has led to a scandal.
It is one of the important reasons why local communities are clamouring for land banks. It is a public venture that permits a community to acquire without any hassle foreclosed properties lying vacant and abandoned. These they clean and put into use. This move puts a stop to out of the state speculators from playing around while the local officials remain helpless bystanders.
But the process of getting a land bank in place can be a lengthy and complicated process. Flint and Michigan have given the lead in the movement termed ‘Shrinking Cities’. The abandoned localities of the city are cordoned off and the land is permitted to go back to Mother Nature. The idea is great if the communities can achieve it. But for this the local authorities need the land bank or some other toll by which they can exercise control over the empty foreclosed houses as well as land. If not a situation like the Detroit auction will take place when outsiders with funds and expertise will outbid any member of the locality – whether groups of individual investors who are sincere about bringing back the health of the region by rebuilding it. But the speculators are only interested in real estate games.
Joseph Schilling, an urban planning expert from Virginia Tech said, “We do a pretty good job in this country of recycling cans and plastic bottles. But we do an awful job of recycling and reusing vacant properties.”
It is imperative for the national housing policy to be more aggressive towards disallowing outside speculation and encouraging local involvement. If this is not done supported by financial involvement the situation will continue not only to slide but to blow up again into a full crisis. It is a moot question as to why the administration is still tardy about making such moves.
