An abandoned home in Cleveland.

#188 - Fall 2017 Community Development Potpourri

Myths and Misconceptions About Demolition in Cleveland

Demolition can generate emotional reactions, especially in places with a history of urban renewal. But critics of demolishing any vacant homes are ignoring the evidence.

An abandoned home in Cleveland. Photo courtesy of Frank Ford

An abandoned home in Cleveland where the question lies: Should this home face demolition or renovation?

An abandoned home in Cleveland. Photo courtesy of Frank Ford

For more than a decade, Ohio’s Cuyahoga County, which includes Cleveland, has struggled with the effects of over 100,000 mortgage foreclosures. Over 10,000 vacant and deteriorating homes dotting the region’s neighborhoods have plagued communities, creating unsafe conditions, undermining the value of adjacent homes, and discouraging homeowners and landlords from making further investment in their own properties.

On paper, it would appear that Cuyahoga County, like much of the country, is on the road to recovery. Foreclosures in the county are down and median home sale prices have now recovered 83 percent of the peak value they experienced in 2005. But the city of Cleveland itself and its eastern inner-ring suburbs, areas with high populations of people of color, are recovering more slowly (chart 1).

These areas were the hardest hit by abusive and predatory lending practices, followed by high rates of foreclosure, and ultimately high concentrations of poorly maintained vacant properties. In stark contrast to the county as a whole, the East Side of Cleveland, the region with the highest concentration of foreclosure and abandonment, went from a median home sale price of $80,000 in 2005 to a median price of only $18,000 by the end of 2016. The predominantly African-American property owners on the East Side have recovered only 23 percent of the equity they had in 2005. Similarly, in the east inner suburbs, the median home sale price peaked in 2005 at $115,700, then dropped to $41,000 in 2009. As of 2016, it had risen to $60,945, recovering only 53 percent of the 2005 value.

Despite these sobering statistics, civic leaders at the county, city, and suburban level did not despair. They joined with nonprofit, philanthropic, and academic institutions to ramp up programs to remove the crumbling vacant homes that are destabilizing neighborhoods and undermining housing market recovery.

As a result, Cuyahoga County now has some of the most advanced neighborhood stabilization tools and resources ever assembled in one region. All of these tools are coordinated in an approach that is rooted in the belief that positive change is possible.

  • The NEO CANDO property-data system at Case Western Reserve University is widely regarded as one of the best in the country.
  • The Cuyahoga Land Bank is a national leader in both the removal of problem abandoned properties and the repurposing of others.
  • Cleveland’s innovative housing court has been a model for similar courts in the United States.
  • The Western Reserve Land Conservancy, for which I am a senior policy adviser, provides door-to-door property inventory surveys for cities and suburbs throughout Ohio.
  • Cleveland and suburban municipalities have created code enforcement ordinances to hold owners accountable for vacant and abandoned property.
  • The Cuyahoga County treasurer and prosecutor are collaborating to efficiently move tax-delinquent vacant properties to the County Land Bank for removal and repurposing.
  • Cuyahoga County’s Vacant and Abandoned Property Action Council (VAPAC) serves as the go-to forum for surfacing new challenges and crafting collaborative solutions.

For the first time since the crisis began, the amount of funding raised to address the distressed properties undermining market recovery closely matches the scope of the problem.

Unfortunately, these positive initiatives now face a new threat in the form of critics—some coming from academic circles—challenging the strategy. Their criticisms include:

“Demolishing abandoned homes in the Black community is racist.”

“You’re going to wipe out whole communities, just like with urban renewal.”

“We should mothball these abandoned homes so they can be renovated when the market recovers.”

“The money raised for demolition would be better spent on renovation.”

“You’re just demolishing homes because you’ve given up on Cleveland.”

There is nothing wrong with challenging and critiquing an effort. Every program, approach, or initiative should be able to stand up to criticism. But it is grossly irresponsible to make provocative and fear-mongering accusations without backing them up with on-the-ground data, and even more irresponsible to make such accusations while ignoring readily available research.

The Cleveland Housing Market

Deciding what to do with an abundance of abandoned homes, and whether some should be demolished or salvaged by renovation, requires taking into account many factors, including historical significance, time left abandoned, and danger to the community. But in the end, there are four practical considerations: the amount of renovation work required to salvage the homes, the cost of that renovation, the demand for housing in the local market, and the supply of subsidy. With few exceptions, such as a home that has suffered extensive fire damage or is in imminent danger of collapse, any home can be saved by rehabilitation, if the local housing market is strong enough to recover the cost of redevelopment upon resale. Alternatively, even in a weak housing market, any home can be saved if there is an unlimited supply of grant funding to subsidize the loss.

In the East Side of Cleveland and much of the east inner-ring suburbs, high foreclosure and rampant abandonment have led to a collapse of the housing market over the past 12 years. The resulting loss of home equity, which for many homeowners represented their most significant life savings, is an unprecedented tragedy in the history of the American housing market.

Ultimately, Cuyahoga County faces a “Catch-22” dilemma: the 7,200 most-distressed abandoned homes have undermined home sale prices in these hard-hit communities, but the cost of renovating them can’t be recovered because of the low home sale prices. Put another way, the housing market can’t recover if the homes in the worst conditions continue to undermine the value of otherwise intact homes, but the depressed market makes the renovation of these homes financially unfeasible.

In the end, there isn’t a market-based solution for addressing the 7,200 most distressed vacant homes. It is indisputable that there isn’t an unlimited supply of subsidy available. The cost of demolition would be approximately $10,000 per house, or $72 million. The cost to renovate these homes would be far greater. Even the most cost-effective proposals for renovating abandoned homes (which also maximize success by selecting more-intact homes) call for a subsidy of $30,000 per house, three times the subsidy required for demolition.

A graphic that estimates how many homes in Cuyahoga County that will require demolition.

Restoring housing markets and homeowner equity in the hardest-hit African-American communities should be a prime objective for policy-makers. With the limited resources currently available, removing blight by demolition in severely depressed housing markets is the most cost-effective tool to accomplish that objective. But policy-makers should also consider seeking new and expanded resources so that funding would be available for both housing renovation and demolition; then community development practitioners would not have to “rob Peter to pay Paul” by siphoning off funds needed to address the homes in the worst condition. One encouraging effort to do just that is being led by the National Community Stabilization Trust, the Center for Community Progress and others—they are proposing a federal tax credit to finance housing renovation, called the Neighborhood Homes Investment Act.

Let’s look at some of the concerns raised by critics of this demolition plan.

Myth 1: You’re going to wipe out whole communities, just like with urban renewal.

While there are some cases where an entire street or block would need to be razed, these are certainly not in every neighborhood and are limited to the most distressed parts of the most distressed communities. For example, every structure on Chapman Avenue in East Cleveland is abandoned and in severe distress, with no likely market-based solution in sight.

However, it is irresponsible to suggest, as some have, that whole neighborhoods might be demolished. Making such a suggestion as an argument against demolition demonstrates either a failure to investigate the facts or a willful ignorance of them. The 2015 Cleveland Property Survey done by Western Reserve Land Conservancy provides an estimate of the most distressed homes by neighborhood. The St. Clair Superior neighborhood has the highest concentration of homes likely requiring demolition: 280 out of 1,956 homes were identified as vacant and likely condemnable. This constitutes 14 percent of the residential homes, and while high, it is certainly not the whole neighborhood. More importantly, even if all of those distressed and vacant homes had to be demolished, their removal would leave 86 percent of the homes in the neighborhood standing, and help ensure their future viability.

Myth 2: We should be preserving older housing stock, not removing it.

This statement presumes that demolition is only about removing older housing stock, and has nothing to do with preservation. We need to reverse the looking glass—we’re looking at this through the wrong lens. Demolition of the most deteriorated properties is the most appropriate tool, given the resources we have, to ensure the preservation of the vast majority of the older housing stock in communities. Removing the 14 percent of the homes in the St. Clair Superior neighborhood that are dragging the others down will help preserve the 86 percent remaining. If those homes are left standing, they will continue to discourage existing homeowners and new investment and undermine the future viability of the majority of the homes in the neighborhood.

Myth 3: The money raised for demolition would be better spent on renovation of homes.

First, it should be acknowledged this is not an either/or proposition. The Cuyahoga Land Bank evaluates each blighted home that comes under its control for potential renovation, assessing the amount of rehab work required and the cost, and the potential for cost recovery based on local market conditions. By applying this approach, the Land Bank has saved over 1,500 vacant homes on streets and in neighborhoods where market conditions support renovation, or where the loss from doing renovation would be no more than the $10,000 loss from doing demolition. Saving the most distressed 7,200 homes, which require significant renovation work and are often located in the weakest housing markets, will require much more than $10,000 subsidy per house. Spending $30,000, $40,000, $50,000 or more to subsidize rehabs would exhaust the existing funds prematurely. Doing even just 1,000 rehabs this way could mean that 2,000 to 3,000 of the most blighted homes would go unaddressed and allow them to continue to undermine housing market value, threaten the safety of neighborhood residents, and undermine investment in housing rehab.

But is cost the only issue?

If you’re a responsible government official or community development practitioner who has to work within a budget or answer to taxpayers for how you spend their money, then yes, cost is a reality. But it would be a mistake to assume that cost merely means the difference between a $10,000 loss for a demolition and a $30,000 loss for a renovation. Civic leaders must also take into consideration the impact of their decision-making on the loss of property tax revenue for schools, police, fire, and other community services if blight continues to undermine housing value.

Every rehab done using $30,000 (or more) subsidy will mean two (or more) of the most distressed homes will be left standing to continue undermining the market value of homes in their vicinity. Further, the negative impact of those homes that go unaddressed will fall disproportionately on the African-American communities where those homes tend to be located. Planners, community development practitioners, and civic leaders should consider what explanation they’ll give to the African-American homeowner who must continue to live next door or across the street from one or more of those homes left standing because funds were exhausted prematurely.

Myth 4: We should mothball these abandoned homes so they can be renovated when the market recovers.

Some argue that it would be better to leave even the homes in the worst condition standing so they will be available for redevelopment when the market recovers. But how and when can the market recover while they are standing, sending a message to current property owners that it is financially unwise for them to invest in their homes? If you renovate one of the 8,200 vacant homes that is more intact, how do you successfully market that newly renovated home when it is next door or across the street from one of the 7,200 that are mothballed?

Those who offer critiques of blight removal by demolition too often do so from a comfortable distance.

Even assuming for the sake of argument that a distressed neighborhood somehow could rebound in 5 or 10 years without first removing the negative amenity that’s undermining that market, what public official, planner, community development practitioner, or academic researcher is going to tell a neighborhood homeowner: “Sorry, but we’ve decided to leave standing that abandoned house next to yours for an indefinite time until the housing market recovers; we’ll do our best to keep re-boarding it when it gets broken into, but in the meantime please tell your children not to play near it.” All too often we see headlines about arson or drug dealing, a dead body found, or a girl raped or murdered in an abandoned house, and these are almost always in African-American neighborhoods.

Those who offer critiques of demolition often do so from a comfortable distance, when perhaps they should stand in front of one of those abandoned homes in the evening and imagine the anxiety and fear of the homeowners who have to spend the night living near it.

Myth 5: Demolishing abandoned homes in Black communities is racist.   

Let’s begin with the facts. By a wide margin, most of the predatory and abusive lending that caused the foreclosure crisis was perpetrated on communities of color. Further, 86 percent of the 7,200 homes that will likely require demolition are in communities of color, and it is the adjacent and adjoining homeowners of color in those communities who have experienced the greatest loss of home equity and value. It is the residents of those communities of color who live daily with the unsafe conditions created by those most distressed homes. The accusation that demolition is racist is often joined with the suggestion that entire neighborhoods of color will be eliminated. As noted earlier in the case of the St. Clair neighborhood, this is a gross misrepresentation of the truth; removing a relatively small percentage of vacant and damaged structures in communities of color protects existing residents and their homes.

In 2015 the Western Reserve Land Conservancy surveyed all of Cleveland’s 158,000 properties—a process involving 16 surveyors who went door to door, photographed each house, and did a condition report on each structure. Not once during the four-month survey period did anybody ask our surveyors to make sure that we saved an abandoned home. Many times, however, our surveyors were asked: “When is that home coming down?”

Myth 6: Academic research shows that demolition does not restore housing value.

 Critics usually point to a June 2016 study done by Jason Hackworth of the University of Toronto called “Demolition as Urban Policy in the American Rust Belt.” Hackworth concludes, “The notion, in short, that ad hoc, stand-alone demolition as urban policy is a means to market and community improvement is highly questionable.”

He goes on to suggest that those advocating demolition do so for the purpose of eliminating whole neighborhoods: “In a sense, it [demolition] is a return to triage, but rather than using such logic to determine which neighborhoods can be saved with investment, it functions here as the extermination of the already-mortally-wounded neighborhoods” (emphasis added).

Hackworth drew these conclusions from research in which he looked at 269 neighborhoods in 49 cities that experienced demolition since 1970. He concluded that none have seen housing market recovery.

However, this conclusion flies in the face of two other studies—both of which rely on substantial local data —by Nigel Griswold of Dynamo Metrics. In these 2014 and 2016 studies, Griswold found that demolition in Ohio did indeed result in increased housing value for neighboring homeowners.

It’s worth noting that Hackworth was aware of Griswold’s work and actually cited one of his two studies, but only for the purpose of confirming that abandonment undermines housing value. He chose to omit Griswold’s finding that removal by demolition adds value.

Hackworth’s research has emboldened some local critics in Cleveland who allege that those advocating demolition are only doing so because they’ve given up. Quite the contrary; those advocates who view demolition as a strategy to revitalize neighborhoods are doing so because they believe Cleveland neighborhoods are not beyond hope, and are basing that belief on an abundance of locally verifiable data.

A Vital Tool, Depending on the Circumstances

In severely distressed housing markets like Cleveland, community development practitioners and city planners should not ignore the plight of longstanding homeowners whose families have had to live in fear in the shadow of vacant homes. Nor should they ignore local data that suggests that, with the exception of some narrowly targeted areas, there is no market-based solution that supports renovation in the most distressed neighborhoods. Where housing markets are weakest, demolishing vacant homes is necessary to restore housing value because it removes a negative amenity that undermines recovery and prevents renovation from being cost-effective and financially feasible.

In the end, this is not about demolition and renovation as an either/or proposition. Both are critically important tools for housing market recovery, and each has its applicability depending on circumstances. Vigorous debate on this topic should be encouraged, but as we move forward, the debate must be based on facts and existing research that dispels fears and myths about neighborhoods and demolition.