Vacancy Rate Continues to Climb

Hammer I was writing on this topic every month.  It looks like I skipped May and it was becasue I was working to help some buyers purchase a registered vacant building.  What we found was that the cities requirements for code compliance were outrageous.  The rules governing these structures require that they be brought up to a higher standard than any type of housing, except for new construction.

Taking a home that was built in the early 1900’s, that has not been maintained and correcting all the code violations proved to be too expensive.   Building codes change over time and my own home and those of my neighbors have some of the same issues because of their age but there is no requirement that they be brought up to code, not now, not ever.

I beleive that some code violations should be corrected but others seem ridiculous becasue of the age of the homes.  The appraisers, inspectors, contractors and insurance agent that I met with over one home didn’t seem to want to have anything to do with it.

They kept saying "gee this is a really old house".  Well duh! this is the oldest part of town and I would argue that the older homes are built better than comparable new homes are today.  Lets either fix them up or tear them down instead of leaving them vacant and boarded up.  I don’t understand why these homes are being held to a higher standard.

When I reported on registered vacant building in St. Paul in February there were 1624 on the list, in April the list grew to 1775, today we have 1918 buildings on the list.  As a St. Paul resident I am very concerned.  As a Realtor I want to help but so far I have been unable to get even one family into one of these homes.  I have been working on it since last October.  It does not pay very well and it is a lot of work but it is important to me so I just keep going.

I found a statement made by Bob Kessler, St. Paul’s director of safety and inspections:

""Furthermore, in Saint Paul most registered vacant buildings can not be removed from the vacant building list and reoccupied unless all the code deficiencies are addressed. So that means that the houses that are removed and reoccupied are being brought up to code under permits inspected by the city, in many cases achieving a higher quality standard than before they were registered as vacant. While the vacant structures in the city pose a problem, it’s a manageable one that is under control"

I will be back with commentary next month when the  list should be at around 2000 registered vacant buildings.  My neighbors are telling me that this issue is not getting the amount of attention that it deserves.

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8 Replies to “Vacancy Rate Continues to Climb”

  1. Teresa, who tracks whether the buildings are vacant or occupied? I don’t know that there is a way to track vacant homes in my area.

  2. Chris – we don’t really track all vacant buildings. There is a requirement that homes left vacant for a long time be registered. The owner in effect needs a permit. There are many other vacant homes that are not on the list. I guess we could say that the city tracks some vacant homes and that no one really knows how many in St. Paul are vacant. If I were to guess I would double the number the city has. I base this on how many homes I show that are indeed vacant.

  3. A lot could be written about this. I tend to feel it’s one of the hidden topics left over from the bubble in pricing, specific to cities with a large number of older homes. Our area definitely fits into this category and these properties require a lot of money and specialized skills to update.

    I’ve lost count of how many older homes I’ve seen that I classify as “failed flips”. New paint, counter tops and refinished wood floors do not hide old wiring, pipes and windows. All too often the work that was done to a lot of these homes the last couple years, was done by DIY enthusiasts who were in over there heads.

    Based on the homes I’ve been through, the larger historical homes seemed to have a lot of equity pulled from them, but rarely put back into the property. I.E, you were able to buy them cheap because they needed work, in recent years you could use home equity to leverage the property for supposed updates but spend the money elsewhere. So you will find a lot of these places still listed at high prices, but also requiring significant investment after purchase. They also tend to scare off investors, due to the special skills and amount of work needed to update them. Let’s just say the pool of contractors who can ably handle these types of projects is much smaller. Of course, the homes sit empty while we figure all this out.

    The problem to me is that these places require a special type of buyer, and there aren’t enough of them for the number of properties we have. So for every Lowry Hills area (Minneapolis example) where this has happened, you can find numerous examples where it has not.

    While I think St Paul is not helping itself with these restrictions on older vacant homes, I could also envision a future where these had been bought and turned into cheap, deteriorating rentals, which would be equally bad.

  4. It pains me to think about all the potentially beautiful homes just sitting there. Where is the local historical society? There are a limited supply of these homes out there, there’s money to be made.

  5. Investors are not buying because prices are still too high. Speaking from the buyer’s perspective, we’ve been looking for a while for rental properties. We have good credit and downpayment money but at current prices and rents we’ll never be able to make it worth while. There are people out there who are willing to purchase “problem” properties but if a property needs significant upgrade the prices have to come down.

  6. How can people help to change the outrageous code requirements for vacent historic homes? Any active groups or petitons? Historic homes are stonger than new homes because they were made with stronger larger trees from up north and everything was hand made with better quality workmanship. Once these homes are gone they can never be replaced. The cities have to change their narrow views and be like other countries which have very strong protection for their historical neighborhoods,buildings and homes.

  7. The city of Saint Paul has 5 federal lawsuits against them for aggressive code enforcement. My group is the only group I know of actively challenging city policies concerning code enforcement. It takes money to inform the public of this issue and that is something investors aren’t willing to part with so change will not come anytime soon.

    Investors are not buying because it is easier to buy a home that doesn’t require a code compliance. It cost a lot of money to bring cat2 homes into compliance. Then you can add almost a $1000 in city inspection fees on top of that cost. The Department of Safety and Inspections is making a bundle of money off these code compliance’s.

  8. Audio tape of federal court hearing (2/11/10)invovling code enforcement at http://ademocracy.blogspot.com/2010/02/update-fair-housing-lawsuits-against_11.html

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