This article first appeared in the St. Louis Beacon, Oct. 27, 2009 - Rosalind Williams, Ferguson's director of planning and development, is shopping for houses that most prospective homebuyers won't consider: little one-story ranch-style homes built in the 1950s and 1960s, with two bedrooms and one bathroom.
And one more thing: The houses must be foreclosures that have been on the market for at least 90 days.
Williams has about $200,000 to spend from the federal Neighborhood Stabilization Program -- and no shortage of homes that meet her criteria. In September, 52 homes in Ferguson's 63135 ZIP code received some type of foreclosure notice, according to RealtyTrac, and most are considered too small by today's homebuyers. The houses are likely to sit vacant or be purchased by investors who will rent them out, while spending little on their upkeep.
"In Ferguson, we have some very expensive houses and big houses — and then we have a set of smaller ones built in the '50s and '60s,'' Williams said.
These homes — often 1,000 square feet, or less — are common in the inner-ring suburbs of St. Louis, such as Ferguson, Florissant, Berkeley and Jennings. The so-called "first suburbs" were the first stop for residents leaving the city's core in the early days of suburban sprawl.
Williams says the plan is to buy the homes and then "right-size" them by adding a bedroom or bathroom to make them more attractive to homebuyers. The long-term goal: neighborhood stabilization. The city is working with the Robert Wood Realty Co. on the project.
In some neighborhoods, where the lots are too small for home expansion, the city plans to raze the houses and eventually re-subdivide the properties to make room for larger two-story homes.
"We're really land banking,'' Williams said. "But if we raze a house we have to have a plan to do something with that property within 10 years."
Foreclosures not a new problem
Williams will be talking about Ferguson's housing strategies Wednesday at a noon brown bag session at the University of Missouri-St. Louis. She takes a long view on the topic because she has worked in community development for 30 years — first in Berkeley, then 22 years in Kirkwood and now in Ferguson.
Housing problems in the inner-ring suburbs began well before the recent foreclosure crisis, Williams points out. The task of rebuilding these neighborhoods has been on-going since the communities began losing population to the western suburbs.
"My theory is that north county has experienced foreclosures in one form or another for the last 30 years," Williams said.
There was a wave of foreclosures in the 1960s and 1970s in many of these neighborhoods, traced to poorly designed Federal Housing Administration loan programs that essentially put homeowners into houses they couldn't afford to maintain.
"Before, it was real estate agencies getting people into houses they couldn't afford, and then HUD would foreclose," Williams said. "We've gone from the real estate agencies doing these things to the predatory lenders getting people into situations they shouldn't be in — and also to speculators who found it easy to get money. We have different players, but we have the same underlying issue: The houses that seem to be in foreclosure are the small homes that are two bedrooms, one bath and are not very desirable on the market."
Williams said the goal this time around is to break the cycle of house flipping by improving the available housing stock and attracting buyers who will care about their neighborhoods.
Concentrating renewal efforts
Because the pot of urban renewal funds is limited, it is vital that communities target their efforts, Williams said.
"We only have so much money — and it is doesn't go very far,'' she said. "It's like a drop in the bucket. You can't address the whole foreclosure issue.''
The problems are compounded by the fact that the current foreclosure crisis is accompanied by a national economic recession and credit crunch.
"We've always had foreclosures, and we've had investors moving in and flipping houses and keeping things moving," Williams said. "Now, we don't have that alternative. I don't think there are as many of those types of investors because they can't get loans. So, we could see more abandonment of houses."