Global Issues
Empty Condos Hold Opportunity in U.S. Housing Crunch
ATLANTA, Georgia, Aug 07 (IPS) - Even as thousands of families in the United States remain homeless due to a lack of affordable housing, millions of units are sitting empty across the country, including foreclosed single-family homes, foreclosed or vacant condominium units or entire condo buildings, and vacant high-priced apartments.
Large cities like New York and Chicago, which have been grappling with a lack of affordable apartments combined with an abundance of vacant, unaffordable condos, are now trying to turn some of those empty condo units into rentals, with varying levels of affordability. Recent changes in the U.S. economy and the housing market have presented challenges for low-income renters.
Many families whose homes were foreclosed upon have been forced into the rental market. While some efforts, like those going on in Atlanta, Georgia, are providing downpayment assistance to get new families into these empty homes, the new families are not necessarily low-income families.
Of course, many low-income families do not have the credit or the income to qualify for a mortgage to purchase a home, and therefore are forced to rent. According to the National Low-Income Housing Coalition (NLIHC), low-income families face the greatest shortage of affordable rental units among any income bracket.
“In 2010, there were 9.8 million extremely low income renter households in the United States, and only 3 million rental homes affordable and available to these households,” the organisation states in a recent report. Approximately 14 percent of all housing units in the U.S., or over 18.8 million units, were vacant at the end of June 2012, according to the U.S. Census Bureau. This figure includes vacant rentals and single-family homes as well as seasonal units and units that are held off the market for various reasons.
In response, Chicago and New York have set up programmes to convert empty condos into rental units. The Federal Housing Finance Agency (FHFA) also recently announced a programme to convert empty single-family homes currently owned by the government-sponsored enterprise Sallie Mae into rental units.
Denise Dunckal, a spokeswoman for FHFA, told IPS that the agency will soon be announcing its decision regarding proposals submitted by investors to participate in the pilot programme. NLIHC submitted comments to FHFA prior to the beginning of the pilot programme asking for some units to be set aside for low-income families. However, that does not appear to have happened. “The available details of the pilot sale do not indicate that there will be an affordability component to this first stage of the programme. It is possible that affordability will be a component of future pilots or stages of the programme, although there has been no indication from FHFA that this will be the case,” the NLIHC wrote on its website.
Other than the reports from Chicago and New York and the FHFA programme, the NLIHC does not see any national trend towards dealing with the juxtaposition of vacant housing and unhoused people, in terms of providing affordable rentals, spokeswoman Amy Clark told IPS.
In Chicago, an organisation called Community Investment Corporation (CIC) noticed a problem with entire condominium buildings being foreclosed and vacant. CIC suspects that many of the condo buildings were the victims of condo fraud.
“In the course of going out on behalf of the City, looking at troubled buildings, we discovered this whole issue of condo fraud. There were buildings – it would be an empty building, trashed and totally destroyed inside, open to the elements,” Jack Markowski, CEO of CIC, told IPS.
“And then when we did a little research, say it’s a six-unit building, last year all these units were converted to condos and sold for 300,000 dollars a piece,” Markowski said. “The owner – he’s just gone – somebody walked away with 1.8 million dollars.” Markowski says that condo fraud was made possible by banks which would give mortgage loans without proper documentation from the person applying for them. Markowski refers to them as “phony straw buyers”, who he believes may get a cut of the profits and then allow the unit to foreclose. CIC identified over 260 condo buildings in Chicago where this appeared to have happened.
© Inter Press Service (2012) — All Rights Reserved. Original source: Inter Press Service