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Report: Foreclosures Damage Neighborhoods

By Bendix Anderson

Boston — The problem of rising home loan foreclosures is a problem for low-cost rental housing, according to a recent report, Mortgage Turmoil Contributes to Rental Affordability Woes, by Harvard University’s Joint Center for Housing Studies, which also was supported by the John D. and Catherine T. MacArthur Foundation.

“Investor-owned, one- to four-family rental properties account for nearly 20 percent of all foreclosures,” said Nicolas Retsinas, director of the Joint Center for Housing Studies.

Many of these foreclosed rental units are lost to the housing inventory. The renters that live in these foreclosed buildings are threatened with sudden eviction and must face limited options.

The high cost of land and construction has kept the rate of construction of new rental units low. However, the demand has been high for this short supply. Nearly 1 million new renters entered the housing market in 2007, four times the annual number in 2003, 2004, and 2006.

Operators of government-subsidized affordable rental housing may benefit from rising demand for their apartments. However, the lower-income neighborhoods that many developers work in suffer the blight of newly, vacant houses and depressed property values.

However, the housing crisis will offer an opportunity to developers and housing officials, as many foreclosed properties are sold at deep discounts. “This creates and opportunity for a well-capitalized mission-driven entity to acquire properties with the goal of expanding the supply of affordable housing,” said the report.

For more on the report, click here.