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From The Homefront: Blight word we should be careful of using

Rentals remain caught in the backdraft of for-sale housing. Industry watchers said foreclosures, falling home values and tighter standards for mortgage loans have forced prospective homebuyers to rent instead, causing vacancies to decline.
August 22, 2011 | Michael Smart~Sun-Times Media
Rentals remain caught in the backdraft of for-sale housing. Industry watchers said foreclosures, falling home values and tighter standards for mortgage loans have forced prospective homebuyers to rent instead, causing vacancies to decline. August 22, 2011 | Michael Smart~Sun-Times Media

Several Naperville City Council members are concerned about conditions in some neighborhoods. These trepidations go beyond the usual neighborhood complaints of grass being uncut or too many cars in driveways blocking sidewalks to a scarier and all encompassing term: BLIGHT!

While the “B” word is not infecting neighborhoods yet, the fear is that some corners of town are approaching a “tipping point.” If actions are not taken soon, some believe the slide down the slippery slope of disrepair will lead to reduced home values, higher crime rates and appearances of bogeymen typically found in the bad parts of a town.

A culprit behind this perceived deterioration is an increasing trend toward tenant rather than owner-occupied homes.

The Census Department recently announced that the number of Americans owning their homes slipped to 64.8 percent; down from a June 2004 peak of 69.2 percent and nearing lows last seen in 1995. Reasons for not taking the ownership plunge are myriad but include reduced income levels, damaged credit ratings, lifestyle choices, and inability to meet down payment requirements.

The rental housing stock, meanwhile, has increased as “underwater” owners decide to rent their homes rather than sell them when they need to move. The hope for some is that rental income will cover the mortgage until home prices return to levels that will enable earlier investments to be recouped.

Another driver is the reduced attractiveness of alternate investments. This trend leads to investors buying up foreclosed properties and turning them into income generators.

While there is no local empirical evidence that tenant-occupied housing is maintained to a lesser degree than those lived in by owners, anecdotal evidence is readily available.

One solution proposed to address “rental problems” is cracking down on absentee landlords through increased government regulation and oversight. Landlord (and, in some cases, tenant) registration and regulation is not an untested concept.

Both Aurora and Bolingbrook have laws on the books that require registration of landlords and their properties. They also place covenants and restrictions on current and prospective tenants. Fees, along with program administration, are part of this solution.

Whether this level of regulation and associated bureaucracy is required in Naperville is part of the question at hand. Another consideration is whether enforcement of existing property maintenance codes could sufficiently reduce risks without further costs to the city or property owners.

A bigger question, though, is whether rentals are the problem or may be a symptom of a much larger issue — namely affordability of Naperville housing. Beyond owners caught up in the housing bubble, there are seniors, unemployed and under-employed, single-parent households, and more struggling to maintain their lifestyles.

Not everyone can afford lawn services or on-call handymen, so home maintenance often takes a backseat to food on the table or medical care.

The solution is neither simple nor evident. What is clear is that new regulation designed to curtail what might be a few egregious outliers, can create unintended consequences for the rest of the community. Before we start using the “B” word, blight, let’s approach the issue slowly and carefully.

Bob Fischer is president of the Naperville Area Homeowners Confederation. Contact him at bobfischer@wowway.com.

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