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When T. J. Stone moved to Green Valley Ranch more than two decades ago, he loved everything about it. The sprawling housing development was 17 miles from polluted downtown Denver, and the community offered friendly neighbors, acres of parks, and stunning mountain views. Stone paid $88,000 for his home on 44th Place, a 2,300-square-foot split-level built in 1983, with a pear tree and maples in the front yard. Before the foreclosure crisis, the house had appreciated to more than double that amount and the pear tree had grown to 30 feet. But when the banks descended on Green Valley Ranch, Stone began to notice something new-abandoned homes and creeping blight.
After a two-bedroom place nearby on 42nd Avenue was foreclosed, the homeowners' belongings were hauled out to the curb. They sat for days, until neighbors called the homeowners' association to clean up the mess. Local kids broke into a vacant house a block from Stone's and used it for a paintball war. "The drapes were gone," Stone says. "I could look in and see paint over everything-the walls, the windows, the appliances." Other properties grew weeds and scrub brush, or they attracted looters who tore out bathroom fixtures and stole copper plumbing for scrap metal. Still others were sprayed with graffiti.Green Valley Ranch was hit hard and early by the foreclosure crisis. Of 4,800 homes, more than 150—or 1 in every 32—are currently owned by banks, and dozens have been defaced or damaged.
The rest of the country is catching up. Nationwide, 1 out of every 70 homes is now in foreclosure; in the hardest-hit states, like Nevada, it's 1 in 17. The Mortgage Bankers Association estimates that 2.2 million homes went into foreclosure in 2008 alone, and another 1 in 10 Americans is a month or more behind on his or her mortgage.
Often these homes sit in legal limbo for months while the foreclosure paperwork winds its way through the local courts. After banks take possession and the properties become eyesores, local residents watch their property values plunge. The Center for Responsible Lending estimates that 41 million homeowners will see their home value decline an average of about $8,700 as a result of nearby foreclosures.
Even upscale neighborhoods aren't immune. In Phillips Landing, a wealthy gated community southwest of Orlando, Florida, where lakefront Mediterranean-style houses sell for as much as $4 million, 23 out of 365 homes were emptied by foreclosures in early 2008. The homes are relatively new and didn't need much maintenance. The homeowners' association hired a landscaper for the lawns. But the swimming pools were another story.
“The pool in the property behind my backyard was like a swamp for eight or nine months,” says Frank Rubino, president of the Phillips Landing homeowners' association. "First it was green, and then it went black. We actually had a plague of frogs for a while." Rubino tried getting the bank to hire a maintenance company—with no luck. "Most banks say, 'Until we take possession of the property, we can't legally comment on it,'" he says. "It takes them somewhere between 9 and 11 months to sort through the paperwork and catch up." More than half of the foreclosed homes in his community remain unsold today.
In some areas, the damage can be far worse-even deadly. Partying teenagers broke into a long-vacant home in West Babylon, New York, and did $20,000 worth of damage, including knocking holes in the walls. A five-year-old girl drowned after falling into a pool behind a foreclosed home in an Indianapolis suburb. In November, a firefighter in Detroit was killed battling a blaze in an abandoned home, which investigators later determined had been caused by arson.
Local governments can normally handle situations like these, but they are overwhelmed. Florida's Orange County budgeted $400,000 this year to respond to housing code violations—problems like overgrown lawns, unsafe houses and pools, and broken windows. "We hate to leave places looking like 1983 Beirut," says Robert Spivey, the county's manager. But his department went through the entire year's budget in just three months. In a typical year, the county demolishes about 20 homes so far behind in repairs that they're unsafe; this year, Orange County expects to knock down 50 or 60. For the thousands of homeowners who left the city to escape urban blight, it's a grim situation as decay threatens to overwhelm the suburbs too.
But a growing number of homeowners are fighting back. In Connecticut, Colorado, and California, neighbors are working together to reclaim their streets. Ardena Perry has lived in her 1,600-square-foot ranch house in the Vistas, a development in Sparks, Nevada, since 1997. Three percent of its 1,500 homes have been foreclosed, damaging the curb appeal of neighboring houses. But Perry and her neighbors aren't waiting for the cavalry to ride to their rescue; they're mowing lawns, pulling weeds, picking up trash, and collecting phone books on vacated properties themselves. Perry is out a lot, strolling the neighborhood with her two Newfoundlands and her German shepherd. "This is a walking community," Perry says. "We notice when a house is empty."
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