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April 28, 2009

Q&A: Dollar Homes

Two Q&As for the price of one this week!

Wonk reader Matt Gonter noticed a new blog called Baltimore Housing Overstock that's trying to revive the idea of "dollar homes." (The city raffled off 104 homes for $1 in 1975, as this Live Baltimore bio of Otterbein notes. You can read about the larger, longer-running homesteading project here.)

I thought you all might be interested, so I chatted by email with Steve Goodman, the blog owner and a Better Waverly resident. He kicked off the site last week with this description of his proposal and a request that people go to Mayor Sheila Dixon's May 6 "neighborhood conversation" about vacant and abandoned properties.

Q. Why did you start the site? Do you plan to keep it up as a blog, or do you see it as more of a way to get your proposal out there?

I started the site as a way to spread the word that the mayor is interested in addressing the blight issue, and to rally public support for action. I think we're at a unique moment in time when there is a lot of flux in our country, and a coherent vision of the future can be quite powerful. I want to publicize that there are many people in Baltimore who love the city, but know that it needs to change and are hopeful for what lies ahead. I don't have any long term plans for it; I'm taking it day by day at this point.

Q. Why are you concerned about the city's abandoned homes?

Funny question! It's like asking "why are you concerned about the tumor?" I'm concerned about the city's abandoned homes because of the lead and asbestos that seep into the water supply from a house with no roof, the psychological effect of living in a city that looks like no one cares, the police blue lights that I see in Greenmount West but not Roland Park, the young girls who get raped in vacant houses in broad daylight, etc.

Blighted neighborhoods correlate highly with high crime rates, poor public education, poor transit solutions and poor public health. There has been a lot of ink used to cover crime, education, the Red Line and JHU studies. We need to address blight the same way we address the other issues. There are an estimated 17,000 abandoned rowhouses in Baltimore.

Q. Why do you think a "dollar home" plan -- or, rather, auctions of city-owned properties starting at $1 -- is a solution?

It's a great first step towards giving individuals the tools to make a difference in their neighborhood. The majority of city-owned properties are currently valueless on the open market; in fact they are worth less than $0 because they lower the value of the surrounding properties. If we can get these properties into the hands of individuals who want to invest in the neighborhood, we do a lot more good letting an individual put $10,000 into renovating the property rather than putting $10,000 into buying a valueless property. The city needs to think about the long-term tax consequences of entire blocks going up in value, and get these properties into the hands of residents.

Secondly, it's a program that has had success before here in Baltimore. ... Why not try again? The important thing to realize is that if this plan is a complete failure, and every single dollar house ends up in the hands of a slumlord who doesn't maintain it, we're in exactly the same place we are now. There is no way to lose with this plan: either we improve the city a lot, or nothing changes.

Q. Do you have a background in real estate? (I noticed the SquareFeet site -- is that yours?)

I do not have a background in real estate, other than being a homeowner. SquareFeet is my day job; it's a venture based on helping renters find neighborhoods that they would like to live in, and helping them compare apartments more easily. We're based in Baltimore, and will be launching our service this summer.

Posted by Jamie Smith Hopkins at 11:46 AM | | Comments (11)
Categories: Q&A
        

Comments

Hello Mr. Steve, I admire your optimism and certainly hope we can make this happen.

Actually, dollar houses would be nice, but it isn't even necessary.

Selling the vacant properties to potential homeowners won't work the way that it is envisioned.

Most homeowners have no idea what it takes to transform a shell of a building into a nice home. They think that "Extreme Makeover" is how all renovations take place.

When a homeowner take on these huge projects, more often than not, they are overwhelmed and overspend thus busting whatever budget they may have projected. (See reruns of "This Old House" for numerous examples.)

In addition, keeping contractors in line is not for the faint of heart. Even licensed tradesmen (and women) are known to run off with down payments, fail to show up and do shoddy work.

These facts contribute to the well-intentioned buyers of the $1.00 houses taking 5-10 years to really finish the job.

Investors will pay $1,000 to 10,000 (or more) for these properties if all the back liens and taxes could be waived.

These same investors are also willing to put in $30,000 to 90,000 (and more) to renovate the properties for sale to homeowners or to keep as nice rental properties.

Since investors have the incentive to make a profit, they usually have regular, dependable crews to get the job done in 2 to 6 months, depending on the size of the project.

Once renovated, the city can collect taxes on once -worthless properties and whole neighborhoods can be turned around if all the vacant properties in an area can be sold at the same time.

The problem is that small-time investors are not taken seriously though they collectively spend as much or more than the big developers. And they get none of the special tax incentives or sweetheart deals that are given out as a result of campaign contributions.

I'll be at the Mayor's meeting representing the hundreds of members of my investor association who are each renovating the city one and two houses at a time.

Alan Chantker, President
Mid-Atlantic Real Estate Investors Association (MAREIA)

Actually, Mr. Chantker, scroll through the properties on our site. 99% are investor-owned, and we would be willing to bet that most of the abandoned housing stock in Baltimore that's not owned by the city -- is owned by investors. Adding insult to injury, they're owned not by city residents who are also investors -- most of you live elsewhere, and don't have to suffer the effects of the havoc that can be wreaked on our neighborhoods.

We want these homes in the hands of homeowners, not people who care more about profit than community.

Frankly, sir, investors had their chance -- and look at the housing market across the country, not just in Baltimore. It's time for you to step aside and let the good people of this city have their part of the American Dream.

Slumlord watch is right. Many of the vacant properties are owned by "investors" living in the county. You just have to go down every street in Reservior hill. Investors will not fix houses when they cannot turn a profit. But real home owners will fix to have a place to live.

@ Donald G. Wilson,
Thank for your your kind words and support! Together, we can make a safer, healthier, cleaner Baltimore!

@Mr. Chankter,
Thank you for sharing your perspective on the issue. I agree that the biggest hurdle right now is getting properties out of City ownership and into the hands of private citizens.

@SlumlordWatch and @Semiconscious,
It is also clear that many blighted neighborhoods have reached that point because of absentee investors. It is important to make a distinction between speculators who do nothing to improve the fabric of a community, and investors who actively improve a property. There is nothing wrong with profit per se - it is the means used to reach that end that need to be examined.

As a citizen, I realize that there are many, many diverse perspectives on our city and how to chart its future course. We will be best served by listening to each other's perspectives, as there is much to learn from each other.

Hi;
Im from New York.
Im interested in the current offerings for the one dollat homes in Baltimore.
Where I can get the information on these offerings?

Hi, Rasem -- there isn't a dollar-home program anymore. This post is a Q&A with a Baltimore resident who thinks it ought to be revived. (Take another read through.)

Can't find the dollar house program. I'm trying to get out this homless cituatoin.

Hi, Michael -- see the comment directly above yours. (Quick answer: There isn't a dollar-house program.)

You might try connecting with the homeless-assistance community to see if someone can point you toward an affordable housing situation. Here's an example of a shelter that also has resources for people trying to leave homelessness behind: http://www.jhrbaltimore.org/shelter.htm

Hi! Do you have an update on the Baltimore Dollar Home program? I am a single lady designer, I could fix up my own home if I only had the chance! I could also work on renovating other such homes. Please advise where to look for the Baltimore Dollar Home, or similar programs, in today's economy. I am otherwise not able to have my own home. Thanks!

Sorry, Steph, the situation is still the same as I mentioned in previous comments -- there is no dollar-home program.

If you're interested in the idea of buying fixer-uppers like foreclosures with some city assistance, this page on Live Baltimore's website might help: http://www.livebaltimore.com/resources/incentives. The city's Vacants to Value website also has some information: http://www.baltimorehousing.org/vacants_to_value.aspx

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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