Another Real Estate Time Bomb: Unsellable Vacant Homes?

08-12-2011 • NakedCapitalism.com/

One of the notions you often hear voiced is that the residential real estate market won’t recover until it “clears”. That belief is then used to argue for faster foreclosures, when foreclosures are certain to result in lower prices than modifications (to the extent that borrowers have enough income to be viable with a deep mod; there is no point in trying to rescue those beyond salvation). But whatever form of “let’s get this over with” you believe in, whether the Mellonite “liquidate homeowners” or a mix of foreclosures and mortgage mods, the tacit assumption is that the foreclosed homes will be sold in an orderly manner (or in cases where communities have shrunken, razed). But what happens when you have unsellable homes, becoming havens for squatters or targets for vandals? They not only pull down the values of properties nearby, but they also represent a safety risk. To put it bluntly: vacant homes are crackhouse futures.