Cities Buy Homes to Prevent Urban Decay

As more home foreclosures drive their way through the US, the nation's hardest hit cities have found a way to ease the strain and urban decay that their communities are seeing.

By: John Noble

As more home foreclosures drive their way through the US, the nation's hardest hit cities have found a way to ease the strain and urban decay that their communities are seeing. By using a mixture of taxpayer and private funding, the cities of Boston, Minneapolis, and San Diego, along with a few others are buying foreclosed properties and having them refurbished and resold. This is all in an effort to prevent entire neighborhoods from falling into decay.

So far, these moves have all been small-scale, but local politicians believe that those small steps may only be a starting point, and with $4 billion in federal funding approved with the housing bill, that starting point may turn into something on a much larger scale. Those home sales are already making an impact. Those purchases by cities contributed to a 3.1 percent increase in existing home sales in July.

Of course that small boost doesn't mean anything for the overall markets, since the number of homes for sale climbed again to another record level. Without buyers snatching up foreclosed properties for bargain prices, the problem would be much worse. Some free-market advocates say that increased sales alone should stem the tide of constantly higher distressed property numbers, but civic leaders say that the market isn't moving quickly enough to compensate, because of the overwhelming foreclosure rate. Developers, though, say that the government needs to act as an intermediary.