Foreclosures have been hurting the single-family home market for months–and making headlines as families lost their homes due to loan resets and sinking equity.
The historically high foreclosure rate has caused growth in the rental market as former homeowners look for a new place to live; but the effect on the apartment market hasn’t all been positive.
Because apartment buildings have owners, too–and those owners sometimes default and enter into foreclosure–renters can get kicked out with little notice.
And as some recent reports indicate, the small multifamily building market–which offers affordable housing options for families in many cities–may be in serious danger as a result.
According to an article in today’s Chicago Sun-Times, 35 percent of the almost 14,000 foreclosures filed in Chicago in 2007 involved two- to six-unit apartment buildings. Buildings of that size in the city are, the Sun-Times says, frequently owner-occupied–and widely considered to be affordable housing.
In some neighborhoods, most of the foreclosures were of small
apartment buildings, the Woodstock Institute (which measures foreclosures) said.
six-unit buildings comprised nearly 87 percent of the foreclosures in
West Garfield Park last year; the same kind of buildings made up 70 percent of the foreclosures in neighborhoods like North Lawndale, the Lower West Side, East
Garfield Park and New City.
Which poses a big problem for the city’s housing market: If economically challenged areas are losing a large number of affordable apartments, where are the residents going to live?
Are developers working overtime to add to the city’s affordable housing market in anticipation of the growing need? Is public housing ready to accept a significant amount of new applicants who are likely not going to be able to find alternate affordable housing options?
The Woodstock Institute says that the continued loss of affordable housing–which is probable, due to the continuing loan fallout–could "destabilize communities," the Sun-Times reports.
Chicago isn’t alone in its struggle. In Boston, foreclosures–even in low-income have traditionally been just a small portion of the market. But times are changing: And in Lawrence, Mass., almost as many homes were foreclosed upon as were sold in the first four months of this year, according to real estate tracker the Warren Group.
Today, more than 45 percent of all area real estate transactions are bank foreclosures, the Boston Herald reports; given Boston was one of the areas hardest hit by the housing slump, that’s not shocking–but it is bothersome because it’s a big change–and almost twice the statewide foreclosure average.
“It is certainly disturbing,” Thomas Callahan, head of the
Massachusetts Affordable Housing Alliance, told the Herald. “It has the effect of
depressing the market.”
We’re not hearing as much about multifamily foreclosures as we are about single-family ones. But they’re out there–and the foreclosures in many ways are even more tragic than single-family home repossessions because they affect more residents.
Numerous programs exist to help troubled single-family owners; does our industry need more help, too? Could this growing concern spread to a housing market crisis–one that could threaten the very existence of small multifamily buildings?
What do you think?