Rust Belt mired in housing crisis

CINCINNATI --- Meet the forgotten housing crisis.

While most attention has focused on the wave of foreclosures sweeping mostly middle-class, suburban Sunbelt neighborhoods from California to Florida, the nation's emptiest neighborhoods have remained concentrated in the same place for nearly a generation: the mostly minority, poor, urban neighborhoods of the American Rust Belt.

An analysis by The Associated Press shows the emptiest neighborhoods are clustered in places hit hard during the recession of the 1980s -- cities such as Flint, Mich.; Columbus, Ohio; Buffalo, N.Y.; and Indianapolis.

"I'd move in a heartbeat if I had somewhere to go right now," said Cindy Olejniczak, of Buffalo. About every third home in her neighborhood is vacant.

"It's almost like you wish they would just level the whole neighborhood," she said, "and start rebuilding again from scratch."

Federal lawmakers have designated nearly $6 billion over the past year for local governments to do just that -- buy and either rehabilitate or demolish foreclosed and abandoned homes.

The AP's analysis, however, shows the money will make only a modest dent in the problem. As of March 31, there were about 4 million homes that have been empty for 90 days -- about 3 percent of all U.S. homes.

The federal money will be distributed based on local rates for foreclosures, high-cost mortgages and vacancies.

The number of abandoned homes scattered throughout the nation's 65,000 neighborhoods has the potential to prevent the economy from recovering. Experts say as more houses stand vacant, property values and tax revenues drop. The drop in property values leads to fewer buyers, which leads to more vacancies.

Jennifer Vey, a researcher with the Brookings Institution said people have been shoved out of the Rust Belt by the collapse of the manufacturing economy for more than a generation, and drawn to the Sun Belt by more jobs and a lower cost of living.

In Buffalo, there are as many as 10,000 abandoned homes. Suburban sprawl, an aging population and manufacturing losses have left the city with a population under 300,000 -- about half what it was during the 1950s.

Even with billions of federal dollars, civic leaders such as Steve Leeper, the director of a Cincinnati development group, say fixing lead paint, asbestos and decay takes a long time.

So far, his nonprofit group, backed by local businesses, has spent $84 million to rehabilitate housing in Cincinnati's Over-the-Rhine neighborhood.

Already, there are a more than a dozen new shops, restaurants and small businesses there, and more than 80 percent of new condos have been bought, at an average price of $150,000.

But the renaissance hasn't been felt everywhere.

"I think the direction the city is going in isn't helping the low-income and middle people. It's pushing them out," said the Rev. Leroy Owens. "The lower-income people need a place to live, too. They're getting discouraged."