Value is a moving target in a down economy

For many of us the American dream included growing up, finding a stable job, and buying a home of our own. Generations of men and women put their faith and their savings into home ownership with the unshakable belief that real estate goes up in value over time – no matter what.

That belief system has been shaken badly in recent years. Many of us find ourselves paying mortgages that have a greater value than the buildings they're financing. Most of us muddle through and hope for the best. Others move on, leaving the buildings without tenants, inhabitants, or regular maintenance.

When that happens the bank will eventually foreclose on the building, assuming a mortgage is owed. Foreclosure can be devastating to a family, but it's no picnic for the bank either. Now saddled with the costs of maintenance, property taxes, insurance, commissions to real estate brokers and even local code violations as the property sits empty and idle – the bank's are looking for a way out from under the burden of supporting properties they never intended to own.

Brady Dennis has a story running in The Washington Post this morning, that details this exact situation. He focuses on Cleveland, Ohio because they are not only hard-hit by abandoned properties and a plunging real estate market – they're doing something about it.

Bank of America, Wells Fargo, and J.P. Morgan Chase are literally giving away abandoned properties in Cuyahoga County so they can get the properties off their books. Ownership is being transferred to the Cuyahoga County Land Reutilization Corp, which has set up land banks with the specific aim of acquiring these properties so they can be put to a better use.

That raises the question, of course, “What exactly is a better use?”

That fair question deserves a fair answer, although it would seem likely that the discussion will be long and fraught with twists and turns and differences of opinion that could go on for years. It's an interesting development in any case. It brings a new perspective to the old sales adage, “Our loss is your gain.”

It seems sometimes as if we are all losing in this deal, at least to some degree. Let's hope that the light at the end of the tunnel gets brighter soon, and while we're at it let's hope that the tunnel gets shorter, too.

You can read Brady Dennis' story here. It's worth a peek.