Neighbors worry about sagging property values
Neighbors worry about sagging property values
Some, but not many, St. Charles homeowners worried about living near foreclosed homes should get some relief starting this spring.
St. Charles officials are expecting to get a federal grant in the near future that would allow the city to purchase foreclosed homes, rehabilitate them if necessary, and then put them back on the market. That process could start by April, according to Anne Klein of Community Program Development Corp., the St. Louis-based company the city plans to hire to run the program.
However, the amount of the grant is expected to total only about $640,000, she said. Klein is quite familiar with St. Charles County. She worked for years in policy development for former County Executive Joe Ortwerth before joining CPDC.
Bruce Evans, an official in the city’s Community Development Department, said he hoped the amount would allow the purchase of 10 or so homes in St. Charles.
As of the end of October, there were 204 foreclosed residential properties in the city, according to a list prepared by CPDC. Of that number, 61 of the properties were vacant lots when the foreclosures took place. The remaining properties featured either single-family residences or multifamily housing, according to the report.
“Honestly, it’s lower than we thought,” Evans said about the total number of foreclosed properties. But he also cautioned that this was a “very fluid list.”
Plans call for CPDC to run the program, while the city will oversee its operation and decide what properties should be purchased, Evans said. There are foreclosed properties “scattered all over town,” but city officials probably will look to buy clusters of foreclosed homes under the theory that a cluster of these properties would have a more detrimental impact on surrounding home values than would a relatively isolated, single foreclosed home, he said.
Thus far the city has done only drive-by inspections of foreclosed properties. “My guess is very few of these homes [that the city ends up buying] will need any work,” Evans said.
That could be because many of the homes are still occupied, or were as of the end of October. The CPDC said that of the 143 foreclosed residences counted in October, 107 still were occupied. “We thought more houses would be empty,” Evans said.
Klein said the grant, which is being funneled through the Missouri Department of Economic Development, requires that the foreclosed properties be bought at a discount. In this case, the purchase price must be at least 15 percent below the appraised value of the property, she said. The property can’t be sold for more than the purchase price and the cost of any repairs, she added. For example, a house purchased for $100,000 and requiring $20,000 in repairs could be sold for no more than $120,000.
Buyers would have to meet certain income requirements, but the program “tries to hit the middle-income group,” and not just lower-income residents, Klein said.
Denise Liebel, executive director of the Community Council of St. Charles County, helped spearhead the effort to get the grant money. She said if current economic conditions persist, there may be opportunities to obtain additional grant money to buy foreclosed properties in other parts of the county. The Community Council serves as a clearinghouse for the county’s health and social welfare agencies.
Klein, who worked with Liebel on the grant application, said the original application requested more than $6.5 million to buy foreclosed properties in St. Peters, O’Fallon, Wentzville and unincorporated areas of the county. But the DED, which looked at income levels and other criteria besides the number of foreclosed properties, deemed those areas were not eligible to receive the grant money, she said.
Mark Stallmann, CEO of the St. Charles County Association of Realtors, said foreclosures generally have not had a significant impact on home values.
“It’s a localized problem,” he said. “Foreclosures have not had a dramatic effect on the overall market.”
But he acknowledged that a homeowner living next to a foreclosed property could be impacted. He compared it to living next to a neighbor who didn’t maintain his home.
Of course, this program helps some homeowners living next to foreclosed properties and the banks and other lenders now stuck with these properties. But it does nothing to help those who lost their homes.
Congress still is debating how much money should go into the economic stimulus legislation now under consideration to help those homeowners facing foreclosure.