Foreclosures continue to plague the Rhode Island housing market, with the number of single-family foreclosures statewide rising from 1,891 in 2010 to 2,009 last year, according to a report released today by HousingWorks RI. Not surprisingly, because it is the community with the largest number of single-family homes, Warwick foreclosures outnumber those in other communities.
During the 36-month period from January 2009 through December 2011, a total of 686 foreclosure deeds were filed in Warwick, according to the report.
Those numbers are actually less than what was recorded with the City Clerk. For the same period, the city shows a total of 958 for all foreclosures – residential and commercial. So far this year, there are 71 foreclosures, reports Ken Mallette, city assessor and tax collector.
Mallette notes the city’s numbers are a combination of residential and commercial. Still, he says, “I don’t know where they’re getting their numbers from.”
But regardless, foreclosures are high.
“It is not surprising that we lead the state. However, it changes dramatically when we analyze by total number as a percentage of total number of available units. We actually are ranked eighth in that manner,” Mayor Scott Avedisian said.
While Avedisian called the number of foreclosures “too many,” he added, “the fact that so many of them are resold quickly shows the viability of housing sales in the city.”
Mallette pointed out that “foreclosures become affordable housing.”
Overall, he is seeing a decline in foreclosures. At the current rate of foreclosures, Warwick could expect a total of about 210 for the year as compared to 316 for 2011.
“There are not so many in deep trouble,” he said.
Mallette believes programs aimed at modifying mortgage payments and foreclosure avoidance help.
“We will continue to work with Rhode Island Housing and other partners to get people resituated in their mortgages and assist in other ways – such as employing the Hardest Hit Fund programs,” Avedisian agreed, and added, “The real answer to many of these problems is affordable housing, which is why I was happy to be part of the group reaching out to the governor and asking him to propose the bond issue. I am grateful that Governor Chafee saw fit to include the bond issue in his budget proposal.”
“This is a really serious issue for the state. We are still struggling with the foreclosure crisis,” Nellie Gorbea, executive director, said in an interview Tuesday. She also sees the situation as reason why the state needs to develop a long-range affordable housing strategy, and why voters should be supportive of housing bonds proposed for the November ballot.
Governor Lincoln Chafee has proposed a $25 million housing bond in his budget and Senator John Tassoni has introduced legislation for a $75 million bond.
“For Rhode Island to remain truly competitive in attracting and retaining businesses and growing a vibrant workforce, the state must elevate long-term affordable housing into its overall economic development strategy and develop a consistent funding policy for long-term affordable housing development and operation,” Gorbea said in a statement.
Gorbea sees the government as facilitating funding for the development of affordable housing. Under existing programs, non-profits, such as the House of Hope CDC, purchase and rehab houses that have gone into foreclosure and make them available as affordable housing to qualified buyers.
Under deed restrictions that can range from 30 to 99 years, the properties must remain as affordable and, when sold, must go to a buyer with a similar income level. According to HousingWorks, the state currently has 36,668 long-term affordable housing units, the majority of which are elderly housing.
Apart from what foreclosures have done to the housing market, and the fact that it is reflective of the state’s economic malaise, Gorbea said it has had a negative impact on the rental market. The report estimates more than 6,300 apartments were lost due to the 2,178 multi-family foreclosures from January 2009 through December 2011.
With a declining pool of apartments, Gorbea observes, rents are being driven up. She said that rents for three-bedroom units have increased 75 percent in the last 10 years, with two-bedroom units up 50 percent during the same period. As a result, one in four renters are paying 50 percent of their income on housing, she said. An expenditure of 30 percent on rent is considered affordable.
Another key finding of the report is that the $50 million housing bond passed in 2006, also known as Building Homes Rhode Island, is helping to stabilize local communities hit hard by the foreclosure crisis.
HousingWorks RI suggests investing in strategies that will guarantee a long-term supply of affordable homes to ensure Rhode Island emerges from the foreclosure crisis economically stronger.
Gorbea said Rhode Island’s neighboring states are already taking decisive actions to grow their supply of long-term affordable homes as a driver for economic growth. Massachusetts’ Fiscal Year 2013 budget recommends spending almost $375 million on housing programs, an increase of more than $25 million over current spending. In Connecticut, the governor allocated more than $330 million to bolster affordable and supportive housing across the state, bringing that state’s total commitment to nearly $500 million over the next 10 years.
While the report notes that Chafee is the first governor to include a housing bond as part of his budget, Gorbea said she hopes the legislature will act to place a $50 million housing bond on the ballot.
She has the endorsement of Warwick Mayor Scott Avedisian.
“I would support the $50 million and think a consistent housing policy is a good start. The state needs to move away from sheltering and focus on creating housing opportunities of all varieties,” he said in an e-mail.
HousingWorks RI is a coalition of more than 140 members working to ensure that all Rhode Islanders have access to a quality, affordable home. Members include banks, builders, chambers of commerce, colleges, community-based agencies and advocates, faith groups, manufacturers, preservationists, realtors, municipal officials, and unions.