Why and How to Avoid a Foreclosed House
Although most commonly associated with automobiles, the term “lemon” comes from the beginning of the 20th century and indicates any item sold in substandard condition. Today, this term could be used to describe the fire sale of homes that have been ravaged to the point of uninhabitability, a common and underreported side effect of the housing crisis.
Foreclosures and Underdeveloped Housing Stock
Homeowners who can’t keep up with their mortgage also have trouble keeping up with home repairs. With record foreclosure rates and a shadow inventory of bank-repossessed homes that haven’t been put on the market, a recent trend toward poor home maintenance seems to be accelerating. Indeed, regardless of the condition of their mortgage, many homeowners neglect and/or underestimate the required level of maintenance associated with being a homeowner. With 130 million homes in the U.S., on average 31 years old, continual upgrades are needed not just to maintain the basic livability of a home but also to allow its energy efficiency to keep pace with higher energy costs.
This same reality is causing experts and pundits alike to assert that the home improvement and remodeling industry is poised for strong growth and recovery once the economy gets back on its feet. Of course, this assertion is dependent on the eventuality of people owning, occupying, and overhauling these foreclosed homes before they are literally run into the ground. Indeed, while the “echo” boomers–offspring of baby boomers–are supposed to give a lift to the economy as they mature, these demographics may now be seen as an economic lifeboat for the housing crisis.
These Homes are Target for Vandalism and Property Destruction
Between vacant and summer/vacation homes, the Census Bureau says a record one out of every nine homes is unoccupied. From foreclosure signs to word-of-mouth, it’s not hard to discover that a home is unoccupied, as these homes become prime targets for vandals, squatters, or even violent political protests. Toilet paper and eggs have given way to spray paint, busted windows, crow bars, and even arson. While the housing market has caused home values to plummet 30 percent since their peak in 2006 and nearly 20 percent in the last year alone, this vandalism can cripple the value of the housing structure in a single day. How common are these trends? Thomas Popik, an expert with Campbell Communications, a Washington-based group that supplies data to private mortgage industry analysts, recently had this say in an interview with CNN: “About a third of all of the foreclosed properties nationwide have been so damaged, either by the previous owners or by criminal gangs coming in after the foreclosure, that they no longer qualify for standard mortgage financing.”