Here’s the thing about waves. If the first wave brings you to your knees, the second one doesn’t have to be a tsunami to finish you off.
My friends in real estate — not just in DeKalb, btw — have been working exclusively on short sales for at least a year with no end in sight. Now comes word that millions are still falling behind on house payments and potentially headed for foreclosure.
About 5 million to 7 million properties are potentially eligible for foreclosure but have not yet been repossessed and put up for sale. Some economists project it could take nearly three years before all these homes have been put on the market and purchased by new owners.
And the number of pending foreclosures could grow much bigger over the coming year as more distressed borrowers become delinquent and then, if they can’t obtain mortgage relief, wade through the foreclosure process, which often takes more than a year to complete.
The first wave took out the subprime borrowers but the next one will be about people with good credit and good loans who have become un- or under-employed — last I checked, we haven’t exactly been adding jobs like crazy.
Next, let’s look at the local foreclosure picture and the aldermen-Judases.
According to RealtyTrac, there are currently 153 bank-owned properties and 152 homes in pre-foreclosure within the 60115 area code. Another 50-60 are up for auction. So, that’s 350 properties already pulling down their neighbors’ property values, plus some unknown number of financially-distressed homeowners who are not yet a blip on the radar screen but will be.
The situation has a number of implications, but first and foremost is the trend for tax revenues of all kinds to continue to drop for several years. Right now it is extremely unwise to borrow any money that has to be guaranteed with said tax revenues and most especially property taxes. The City of DeKalb’s plan to issue general obligation bonds for the $12 million it wants for downtown beautification is, therefore, a disaster in the making.
Some might disagree with this assessment. Let me remind you, then, that the predictions made by members (like me) of the DeKalb Naysayers of Dooom Club over the past 2+ years, in regards to the city’s financial mess, have come true. The city’s have not. In my world, if the Naysayers of Dooom say “batten down the hatches,” we batten.
City Council has a couple of clueless buffoons on it, a couple new members who simply aren’t up to speed, and a couple others who know the score and are either selling us out or simply don’t have the ‘nads to stand up to the ReNew crowd. I won’t call out anyone in particular today because the reasons for Council’s not living up to its fiduciary responsibilities are pretty much academic at this point.
As for the cure, it’s one that only a crowd of a thousand on the doorstep of city hall could administer.