The blight inflicted on communities by vacant properties is undeniable; in fact, a new white paper suggests just one year of vacancy causes around $150,000 in damages—namely due drops in property value, increases in crime, and increases in costs to police and fire departments that service the area.
In a white paper titled “Understanding the True Costs of Abandoned Properties: How Maintenance Can Make a Difference,” Aaron Klein, a former U.S. Treasury Department Deputy Assistant Secretary for Economic Policy, studies the impact vacant and abandoned properties have on their communities, as well as what steps property owners and policymakers can take to prevent these unwanted effects.
The white paper was commissioned by Robert Klein (no relation to Aaron Klein), the Founder and Chairman of Community Blight Solutions based in Ohio, which recently became the first state to ban the use of plywood in securing vacant homes.
"The reason why we commissioned the report was to show hard data of the direct correlation between vacant and abandoned properties and community blight," said Robert Klein.
In just the first year of a property’s vacancy, Aaron Klein said there are around $150,000 in financial losses. If a fire occurs on the property—something twice as likely in vacant properties than inhabited ones—that tacks on yet another $30K.
It doesn’t even matter if the home was foreclosed on—simply if the property is vacant or abandoned.
“We know that the majority of these costs are not simply derived from the property’s status as being foreclosed,” Klein wrote, “but rather from its position as being vacant. Abandonment drives the loss of property value and is the cause of increased crime and likelihood of fire.”
Overall, the underlying cause of abandonment-caused financial losses is deterioration of the property, as well as the boarding up of windows and doors on the home.
“Within abandoned properties, we know that the main driver is the deteriorating condition of the house,” Aaron Klein said. “A large driver of this is when the property is boarded shut.”
Boarding up a property tells the community—and potential criminals and squatters—that the home is going to remain vacant for the foreseeable future, Klein said.
“Simply put, no one boards a property that they are going to have vacant for a few weeks during maintenance before renting or selling,” Klein wrote in the paper. “Instead it is a longer-term signal that no one will be home for months or even years.”
Boarded-up properties, as Klein put it, are “hubs for crime and criminal activity.” In light of this and the damage simply looking vacant can inflict, Klein proposes a solution for property owners: Make properties appear inhabited even when they’re not.
“Given that more than $85,000 of these costs are driven by the property’s status as vacant,” Klein said, “a solution that obscured that condition—that is, made the home appear to the external viewer as occupied, would reduce and potentially eliminate these costs.”
Not only would efforts like these reduce the damages done to the community, it would also help stabilize property values and prevent foreclosures and other area homes. And that’s why, Klein said, foreclosure prevention programs must make addressing vacant and abandoned properties a major goal.
“Programs and policies created with foreclosure mitigation in mind must turn their attention to ways to better secure vacant properties,” Klein wrote. “Realizing the potential economic savings, value creation, the opportunity to reduce future foreclosures, and to combat crime, fire damage, and all of the other additional non-economic value that is destroy by vacant properties, researchers and policymakers can and should incorporate smarter methods to secure vacant and abandoned buildings into their analysis, foreclosure research, and foreclosure mitigation and prevention strategies.”
To read the full white paper, click here.