Thursday, April 3, 2014

Same Old Pattern

I have spent the last two days examining the titles on 10 properties in a part of town I know reasonably well. It is also an area that I go to as seldom as possible. It has the reputation as a 'Bad' part of town.

But that reputation is fairly new. A few years ago it was considered declining, and a few years before that it was considered nice.

What happened?

I saw the exact same course of events in each of these ten exams. The timing varied a little, but each had the same chain. And all 10 are currently owned by the same couple.

I can't go into too many details, but I can share a few. All 10 properties are in the Western Cincinnati neighborhood of Price Hill; most are in Lower Price Hill.

All of these properties were purchased in the late 1950's/early 1960's by a couple who lived there 30 years or more, and raised a family there.

How can I tell that from a title exam? Because Mom and Dad both had that address when they died and when the kids inherited the property. And then sold it.

This is where the decline of the property, and, by extension, the neighborhood starts. None of the kids wanted the house in 9 cases and it was sold outright. They were all still owner occupied; I could tell by the address the court used during the foreclosure case. It was the purchase after the foreclosure where things went down hill. Usually purchased by a Trust, or LLC or even a husband and wife, sometimes years after the foreclosure, the first sign is when the tax bill is sent not to a lender or the house, but to the owners at a different address, usually in a much better part of town.

Price Hill was known for years as a working class haven. Mostly blue collar, mostly smaller, older homes (All of my 10 were built between 1900 and 1915), but a clean, well kept community. It has/had several well attended churches. Not a rich neighborhood by any means, but respectable.

I saw one house sell for over $150,000 one year, and for $75,000 at sheriff's sale 5 years later. Then $6000 to an absentee landlord 2 years after that. Do you seriously think that chain of events doesn't affect the rest of the housing values in the neighborhood?

But once the property become a rental things can go downhill fast; especially in a 90 or 100 year old house. And it only takes one house to start a slide. Two houses will accelerate it, and three on a street will guarantee it, especially in an older, less expensive neighborhood.

Because you will have two types of neighbors: elderly, been there forever and renters. The renters don't care and the elderly can't make their voices heard. And their kids won't do anything; moving Mom and/or Dad to a nursing home and selling- or renting- the house is much easier than dealing with the lousy absentee property owners and lousier neighbors.

And things decline anther notch.

Why is this important? because it may soon be coming to a neighborhood near you. Look around your block; how many old couples do you see? The ones who have lived there 20 years or more? How much sales activity do you see? For Sale signs sprout and then age, only to be replaced by another sign, from a different broker.

Or maybe it is the legal notices, and the couple up the street with the three kids have packed up and moved away, 2 steps ahead of the sheriff. It doesn't take much sometimes; a divorce and the wife can't afford the house on one income and child support. Or a layoff, and his salary can't make ends meet. Or a long term-illness; Wife; Husband, or God forbid one of the kids. Between doctors and medicines and hospitals and what insurance doesn't cover it doesn't take long.

Shortly nobody is cutting the yard. Then some punk breaks a window. Next thing you know its two houses on the block; then three-four-10. Each empty property is not an opportunity, but a sign; or a signpost to the families that are now buying in the suburbs.

Don't say it can't happen to your neighborhood; they once said that about Price Hill.

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