Foreclosures benefiting City neighborhoods
With foreclosures still near record highs for the St. Louis area, there is still a lot of doubt in our housing market. Sure residential properties are selling better than they were, but all these REOs will continue to hold values down. That might sound horrible, but this is good for the area in many ways.
In the early 2000’s, with so many people owning properties they couldn’t afford to pay the mortgage on, let alone do repairs, a lot of properties fell into disrepair. All the “up and coming” neighborhoods such as Tower Grove East, McKinley Heights and Benton Park saw so much appreciation in so short a time that properties simply became piggy-banks to be endlessly filled and emptied. Owners had no incentive to fix up there buildings because lenders were giving out cash without questioning the quality of the property. You also saw the problem were people paid so much on acquisition of properties that there simply was not enough room left to fix places up. It wasn’t just a trend, it was an epidemic.
Flash forward to 2010. Overvalued properties have been brought back down to reality; in many cases, even below it. This is bad if you want to sell properties for top-dollar, but for investors and do-it-yourselfers, you couldn’t ask for a better situation. Derelict properties in many area’s are selling so cheaply that people are lining up to buy properties with cash or FHA 203K loans. With acquisition costs so low many buyers are seeing the value in rehabbing these properties right away.
As a result, some areas in South City that could never quite hit the rehab tipping-point are really turning around. Properties that have sat idle and/or vacant for years are seeing tens of thousands of dollars put into them. Entire neighborhoods, Tower Grove East south of Arsenal for example, are transforming daily because of this trend.
There are plenty of sad stories out there, but its not all bad. In the end, I truly feel that this market correction will serve to benefit of our neighborhoods. In a few years, when things start to level off, this movement could even propel some housing values even higher than they were formerly. It’s not all doom and gloom out there.