As a wave of home foreclosures courses through the United States, some of the nation’s hardest hit cities think they have found a way to ease the blight left on their communities by the crisis.
Using taxpayer and private money, Boston, Minneapolis, San Diego and a handful of other places are buying foreclosed properties to refurbish and resell them to developers and homeowners in an effort to prevent troubled neighborhoods from sliding into urban decay.
The efforts so far have been taken on a small scale. But local officials say they can become an important pillar of any housing recovery with the help of $4 billion in federal grants that were part of a housing bill Congress approved in July.
Indeed, the sale of foreclosed homes — not just to city governments but more broadly to investors and homeowners — contributed to a 3.1 percent increase in existing home sales in July, the highest level in five months, according to data released on Monday by the National Association of Realtors.
That hardly means that the housing crisis is over, because the number of homes for sale climbed to another record level as more people put their homes on the market. But without buyers taking foreclosed homes at steeply discounted prices, the problem would be even worse.
Some advocates of free markets say those increased sales should address the rising heaps of distressed properties. But many mayors say the market is not moving quickly enough because lenders overwhelmed by foreclosures are not able to sell repossessed properties fast enough.
Many developers and home buyers are also not willing to take a chance on dilapidated properties in distressed neighborhoods. With some homes staying vacant for months or even years, the government, they say, needs to act as an intermediary.