Puttin' Lipstick On a Corpse...The New Face of the American Dream.

By
Real Estate Broker/Owner with Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate

Fishbowl through the curtainsI'm watching the ABC News Broadcast this evening.  Once again, the topic of the grim condition of the housing market is front, prime and center.  The locale being covered today is Cleveland, Ohio. 

The camera pans across a neighborhood of vacant homes...yes, you read that right.  An entire community of 1000 homes boarded up.  Their owners gone, the neighborhood resembling the aftermath of a war zone.  This is the American Dream turned on it's head.  And, we're likely to see more of this before things settle down.

The news segment takes a tour through the community; even interviewing one of the few remaining legitimate residents who talks about the fact that she no longer ventures out at night.  She has become a virtual prisoner in her own home.

The peculiar proposals being suggested to deal with this travesty are impressive in a bizarre way.  You might want to take note...they could coming to a neighborhood near you!  Because vacant homes tend to attract vagrants and other forms of illicit habitation such as abodes for crack addicts, city governments have a real challenge on their hands when an entire community becomes a ghost town.  Witness the arrival of some creative solutions.

They started painting the houses in Cleveland according to the news account.  Yep, painting whole blocks of houses bright cheerful colors.  But what was most extraordinarily to me was that they also painted FAKE curtains on the windows. A strange form of house graffiti.  Row, upon row of freshly painted houses with matching painted window treatments as a thin disguise for the nakedness of the peril that had descended upon an area which thousands once called home.  The announcer's observation is right on the money..."It's like Putting Lipstick on a Corpse."  In addition, the local government is petitioning for the Federal government and the banks who loaned the money to be responsible for bulldozing ENTIRE communities.  It will be interesting to watch how that one eventually plays out!

While, you may not be facing the spectre of an entire neighborhood in foreclosure next to you, almost everyone now knows of at least 1 home in their neighborhood which has been vacated under less than auspicious circumstances.  Everyone is affected.  Statistics indicate that if you have a foreclosed home within your immediate neighborhood, the value of your home decreases $7,000!  That's a lot of cash.  Particularly when the tax assessed to your home doesn't seem to reflect this.  So, homeowners are being hit with a double whammy...higher taxes AND decreases in Value because of the rapid increase of foreclosures in neighborhoods across the nation.

A related story by BBC News by Steve Schifferes entitled "Foreclosure Wave Sweeps America,"  indicates that  Cleveland has now been beset by a tidal wave of crime in these communities and the city anticipates a tax revenue loss of 100,000 million.

As communities across America deal with this widening crisis, I expect to see more of the following:  tons & tons of blame...don't think the media will not do it's best to add fuel to this tragic tale.  We will also see new legislation which may be draconian or worse.  In addition...heads will continue to roll as investigations and commissions of all varieties investigate allegations of wrong doing.  Sadly, the story will not be neatly packaged into a 5 minutes news segment for those who have lost their homes.  For them, it will be the beginning of a long, long walk to freedom...freedom to experience what we've come to accept as an American Birthright...the right to own one's own home. 

Copyright 2007 Audu Real Estate  All Rights Reserved

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Rainmaker
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Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Totally agree Susan, it seems that it would have been better policy to try to figure out how not to make 1000 homeowners loose their homes, even if this meant substantially reducing their payments for a while. Having government work with the banks to create solutions like that would have been a creative solution to a urgent crisis.
Nov 10, 2007 12:57 AM #44
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Lola~

As always, your BLOG reveals a person of character and one with a precise mind. That's why I read your BLOG, and feel lucky to be in such good company. Now a question...do you have any ideas on how we, as a group of real estate professionals might contribute to the betterment of the housing situation?

Nov 10, 2007 09:32 AM #45
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Renée Burrows
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com

There should have been solutions prior to the problem escalating to this point and I think this is why people wanted to sweep it under the rug.

We definitely need to feel the pain to avoid the same mistakes in the future.  Showing someone a gorgeous swimming pool in the backyard to make them avoid looking at the entire house so they won't see the flaws will not help.

Out of curiosity I am wondering something.  Now when I see entire subdivisions like this the trend is newer build (less than 2 years) and same builder.  Is it about the same in your area?  My belief is that an investigation IS necessary so that builder can be put out of business if wrongdoing is found and this isn't allowed to happen again.

My heart pours out to those that got hurt. 

Nov 10, 2007 10:12 AM #46
Rainer
83,712
Mary Bigelow
GLREA - Coopersville, MI
2010 Letnulls Do It AGAIN!!!!

Lola - very well written again! Like JaneAnne and so many others, this is why I read your blog.

The question in my mind is where the people who lived in those houses went? It would be nice to see some investors come in, purchase the properties and revitalize the neighborhood as rental units for the unfortunate souls who were displaced. After a foreclosure those former homeowners are likely financially upside down and will need to be tenants for a while. This sure makes a good case for banks renegotiating terms on a mortgage.

I am in agreement with Chris that we need to start marketing to our neighbors to the north. Their influx of dollars to Michigan would be most welcome! 

Just imagine the waste to the nations landfills if these homes are bulldozed.

Very sad. 

Nov 10, 2007 10:46 AM #47
Rainer
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Billnulls Blog Florida Realty Professional
Charles Rutenberg Realty - Clearwater, FL
AHWD
I have heard of putting lipstick on a pig -
Nov 10, 2007 11:05 AM #48
Rainmaker
1,088,861
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc

Well done a usual Lola. So many comments about concentrating on the negative and suggesting we not talk about it. For me, there is a huge difference between being negative and being real. The reality is that in many areas, right now, real people with real families are suffering big time from this housing crunch. I speak with potential sellers every day that I cannot help. Some are nonchalant about their problems and some are crying on the phone to me. ALL are just normal folks that may have made a mistake and got in over their head. Or maybe they were caught up in the madness of the real estate "boom" but whatever their situation is I choose not to ignore it and not to just look at the "positive" side of it.

There is nothing positive about a single mom losing her home because she made some mistakes. It flat out sucks! There is nothing positive about the way my market was raped by so called "investors" who just flew in to by a house to flip and make a quick buck. Now there are hundreds of them just sitting vacant waiting to be foreclosed on. Which of course will drag the values down for all the other people in my market who have done absolutely nothing wrong except try to make life better for their families.

Ignoring the "negative" is just like "putting lipstick on a corpse". It's painting a picture that's not reality. It doesn't matter that I'm still having a good year and that I am still focused on making things happen. What matters are the real people that I can't help. 

Nov 10, 2007 02:06 PM #49
Rainmaker
592,568
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate
Did I miss something? How did it happen that so many homes in one neighborhood were vacated?
Nov 10, 2007 03:11 PM #50
Rainmaker
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Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Hi Everyone, Thanks to all of you who have contributed to this discussion.  We do have differences of opinion.  That is OK.  What is most important is that we ARE talking about this.  This is not a discussion which should be defined by others alone...the real estate community needs to be in dialogue. I will be responding to individual comments too...
Nov 10, 2007 07:24 PM #51
Rainer
112,847
Ryan Martin
Windermere Real Estate / Whatcom Inc. - Bellingham, WA
Bellingham Commercial RE Broker
Lola - What a well written post on a tough subject. I live in an area that has been well insulated against the downturn in the real estate market. Our sales prices actually went up this year from last year, yet local news still tries to paint a negative picture. Thanks for sharing this with us. I am surprised that it is not a featured post yet.
Nov 10, 2007 07:34 PM #52
Rainmaker
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Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

janeAnne, Thanks for stopping by!  Glad you asked the question...What should real estate professionals be CONTRIBUTING to the betterment of the housing situation?  I think there is much that we can do.  We have one of the most powerful lobby groups in the United States.  At the national level, we should be utilizing our substantial influence to engage this discussion in a big way. 

We have brilliant economist who work on our staff at the national level.  Their counsel and wisdom and connections with many of the leading universities can create a national dialogue about sustainable ways in which banks and investors can profit by being responsible and taking action to create solutions. 

As real estate agents, we can become more involved in education of consumers...not simply selling homes to them.  Many people truly did not understand the implications of what they did...sadly, many real estate agents did not either.  We are not a poor nation...this is fixable if we choose to do so.  It's a matter of focusing our priorities. 

It will take engagement at the local, regional and national level.  Most importantly, it will take individuals with Vision.  Real estate agents need to stop wringing their hands or hiding their heads in the sand...There's a saying that goes, "if it's going to be...it's up to me!"  These are some thoughts I have...what about you?

Nov 10, 2007 07:34 PM #53
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Hi Renee, Ah..hem...Another uncomfortable moment with your comment  "There should have been solutions prior to the problem escalating to this point and I think this is why people wanted to sweep it under the rug"  We havent' really wanted to explore WHY we were willing to sweep it under the rug.  After all, this did not happen overnight! 

I was talking with a banker this past week in a meeting.  I looked at her and said "c'mon...you bankers are conservative folks...stated income loans without verification???"  She looked at me and just shook her head and muttered..."I just don't know."  The fact is that we all hoped the house of cards would not fall.  Well, it did!  We didn't look for solutions for one very simple reason.  There was money to be made.  It's called greed.

With regards to our local situation, it is nothing like what is being described and portrayed in Cleveland.  But like the rest of the country we do have a lot of foreclosures and short sales.  Fortunately, we do not have entire neighborhoods boarded up. 

From viewing the pictures it did not look like new construction.  These looked like homes in established communities.  My guess is that the situation is also tied into the economic issues that the Midwest has faced in recent years as well as predatory lending and real estate practises. The dynamic that you are talking about should definitely be investigated.  A lot of builders have fallen on hard times here too...

Nov 10, 2007 07:45 PM #54
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Mary, Thanks for stopping by.  I was wondering the same thing...Where did the people go?  The report indicated that many of the homes had been looted.  We've seen this in our local area here too.  Vacant homes stripped of everything PLUS the kitchen sink. 

Your suggestion is very interesting...Perhaps engaging a partnership with investors and local government to create situations in which people could rent these homes and slowly rebuild their credit would have been an intelligent route to consider.  It's certainly better than mile upon mile of vacant homes, increased crime and lost revenues.

Nov 10, 2007 07:50 PM #55
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Hi Bryant, Thanks for your comment.  This year, I was appointed to a Task Force to study this situation and make recommendations to our local Board.  It was truly an education for all the Brokers who participated.  As a result of that Task Force, we created New Advisory material to educate our consumers, placed information on our Board Website to assist consumers in steps to keep their homes and held seminars which were packed to educate our agents about what is going on and how to help clients deal with the process. 

In addition, our Government Affairs committe worked on an important initiative to help already strapped home owners in one of our local townships not  be forced into being assessed thousands of dollars in taxes at the point of sale as homeowners were forced to hook up to sewer services even if their systems were totally functional. 

Your point about what this is doing to home values is very important.  Even those of us who are doing well in real estate will eventually be impacted by this reality whether we like it or not.  The other issue is that those who are loosing their homes through this....well, they won't be buyers anytime soon!  I don't think we're being realistic about how this crunch will actually play out.  That's reality...not negativity.  Appreciate your thoughtful response to this discussion.

Nov 10, 2007 08:00 PM #56
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Lisa...I don't know.  It just is.  And the red dots show the carnage...
Nov 10, 2007 08:01 PM #57
Rainmaker
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Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Ryan, Thanks for stopping by to read and comment.  I'm thankful for an engaged discussion...featured or not.  Grand Rapids, Michigan actually seems to have levelled off...for the first time in a long while, we actually had an increase in sales in our local area.  We are grateful and hope this trend continues. 
Nov 10, 2007 08:04 PM #58
Rainer
111,189
Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO
All Im really going to say is I intend to write my own post
Nov 11, 2007 05:10 PM #59
Rainer
111,189
Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO
Lola can you provide an actual link to the story your post is based on? Thanks
Nov 11, 2007 05:15 PM #60
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Carol, Here's the link from the broadcast: http://abcnews.go.com/WNT/story?id=142042
Nov 11, 2007 11:51 PM #61
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Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land at LA

Lola...Thank you for the post.   I wrote one recently that dealt with Flint, MI.  I live in Central Virginia, far from Flint and Cleveland but we are having some foreclosure problems in our general area.  We may be doing fine individually, but we are all affected by this mess.  Plus, it's not just about how well we are doing on a personal basis but how others are doing also.

Take care,

Kathleen

Mar 18, 2008 11:53 PM #62
Rainmaker
380,341
Eric Kodner
Madeline Island Realty - La Pointe, WI
CRS, Madeline Island Realty, LaPointe, WI 54850 -

The local television news in Minneapolis reported yesterday about foreclosure homes boarded up by banks which failed to winterize them.  Pipes have frozen and burst and water damage has ruined many dozens of such homes in the Twin Cities.  How stupid of some lenders not to take minimal steps to protect their investment in these properties.

When an individual buys a home, the mortgage docs are filled with stipulations that the owner must carry insurance, must not do anything to damage the property or cause its value to diminish, etc., but apparently lenders are under no obligation to do anything to maintain these homes.  The community suffers as a result.  Valuations in an entire neighborhood slide and property tax collection becomes impossible. 

Lenders are on a bandwagon of pointing an accusing finger at people who were foreclosed upon.  And incidentally, these primary homes in North Minneapolis were not owned by speculators or "investors".  Lenders should bear some responsibility for keeping entire neighborhoods from going to ruin.  

Mar 19, 2008 11:35 AM #63
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Rainmaker
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Lola Audu

Audu Real Estate~Grand Rapids, MI ~Welcome Home!
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