Published October 05, 2012
WASHINGTON – The housing bust has saddled the United States with an "extraordinary" level of abandoned properties that inflict heavy costs on the wider community and government aid may be needed to tackle the problem, a top U.S. central banker said on Friday.
"In order to see the robust economic recovery we all want, we need to deal effectively with the large volume of vacant and distressed properties throughout the country," said Federal Reserve Board Governor Elizabeth Duke.
The Fed has cut interest rates to almost zero to boost growth in the aftermath of the recession and vowed in September to buy $40 billion of mortgage-backed bonds every month until the U.S. labor market recovered.
In prepared remarks to a New York conference on the distressed U.S. property market, Duke noted that although unsold home inventory levels have declined as real estate has picked up, the number of abandoned homes remains stubbornly high.
Quoting Census Bureau data, Duke said vacant homes for sale had fallen to 1.6 million in the second quarter of 2012, versus a 2 million peak in 2010, but pointed out there were still 2-1/2 times as many vacant homes out there, just not for sale.
"Some neighborhoods likely will not recover without the assistance of government, and in this time of scarce resources, it is critical that the public sector has the information and tools necessary to ensure that any assistance that is provided is effective," Duke said.
In a speech that dug into the details of where and why homes became vacant, Duke identified three broad categories that described most concentrations of abandoned U.S. homes: post-housing boom neighborhoods, poorer inner city districts, and less-obvious suburban communities in prolonged decline.
"Doubtless there will be costs associated with solving these problems, but it is important to also consider the costs of doing nothing," she said, citing lost tax-revenue and the cost of demolition. "Ultimately, a policy of neglect will be just as - or even more - costly than finding and implementing constructive solutions to the vacancy issue."
(Reporting by Alister Bull; Editing by Neil Stempleman)