Mar 23

I extracted the data from the 28,835 Milwaukee County eviction cases between 1/1/13 and 2/28/15.

Landlords who went to court  lost $22,677,299.01 in these 26 months.  

Remember this was only Milwaukee County And only a small fraction of cases end up in court or are pursued to a money judgment.  Most owners I’ve spoken to tell me that less than a quarter of their non paying tenants end up in eviction court. 

Some sad facts:  

  • Only half the cases resulted in a money judgment against the tenant (14,424 of the 28,835)
  • 12066 were dismissed either by the court or on stip
  • Largest judgment  $243,255.95 (commercial)
  • Largest residential eviction judgment:  $24,348.00
  • Smallest judgment $1.30
  • 4,020 judgments under $200
  • 6,846  judgments over a grand ($1,000-243,255)
  • 4,194 judgments over two grand  ($2,000-243,255)
  • 2,106 Judgments over three grand ($3,000-243,255)
  • 1,068  Judgments over four grand  ($4,000-243,255)
Jan 26

 

This past week, taking advantage of the moderate weather, we began our annual exterior survey of our properties a bit earlier than normal. We walk around the exteriors of all the properties to set a prioritized project list for spring/summer 2015.

The neighborhoods we operate in are the near Southside, from just north of National to Cleveland, 1st to 36th.

While the primary focus is reviewing our properties, we also get a good sense of what is happening generally in the neighborhoods.

If this was a rock band I would have called this the “Fresh Mud and New Green Board Tour” It was absolutely surprising how many properties have been bulldozed and how many more properties are boarded and abandoned since doing the fall review in Sept/Oct of last year.

Anyone who tells you the real estate market on the near Southside has or is rebounding from the 2008 housing bubble hasn’t been out much. 😉 I wrote about what I was seeing in the past  and again here.  It is much worse now.

Many of the new board ups are nice looking properties. However as they accumulate city “reinspection fees” and fines they get to the point they cannot be sold and languish until they are stripped of all value, foreclosed upon by the city for taxes and ultimately razed.

But at least the city was able to tack some fees on it. Fees that they never collected because when the City becomes the owner the only thing left to do was bulldoze  them. (The one pictured in the link is now a mud lot).  Many of these are Zombie Houses

We are seeing sale prices in Milwaukee that make Detroit almost look like a healthy market.

The sales below are listed in the Journal’s Recent Deals sales listing

$11,000: 2356 W Becher St – MILWAUKEE (01/06/15)
$4,000: 2328 S 4th St – MILWAUKEE (01/15/15)
$1,000: 1962 S 16th St – MILWAUKEE (01/02/15)
$3,375: 4624 N 29th St – MILWAUKEE (01/13/15)
$2,850: 323 E Chambers St – MILWAUKEE (12/05/14)
$2,625: 2904 N 16th St – MILWAUKEE (11/24/14)
$37,000: 3410 S 1st PL – MILWAUKEE (01/16/15) — a pretty nice neighborhood.

Dec 02

Let’s assume the “broken windows” theory is correct.  It makes sense – order begets order, chaos and disarray breeds more chaos.  It makes sense logically, whether or not you can quantify the results I’ll leave to those much smarter than I.

However,  Milwaukee attempts to repurpose the theory as an argument for greater rental housing code enforcement and nuisance enforcement aimed primarily at rental housing.  In doing so our city has undermined the true message, which is: For the broken windows theory to produce results an entire neighborhood must be held to a standard.  The researchers use “neighborhood order” to describe the goal.

The article is primarily about police and neighbor intervention into petty crime creates order that reduces other petty crime and larger problems.  The words landlord, rent, code enforcement, building inspection do not appear anywhere in the article. Yet, to hear Milwaukee officials speak of the broken window theory, they frame it as a landlord’s responsibly.

A walk down 5th Place, the original target for the expansion of the RIP (rental inspection program), will show a far greater number of owner occupied housing in serious disrepair* than rental houses.  Milwaukee senior assessor Mary Hennen stated under oath a couple of years ago similarly that owner occupied housing in these neighborhoods are often in worse condition than rentals.

As an apparent precursor to the RIP proposal , on September 3rd and 4th,2014 DNS sent a squadron of five inspectors down Fifth Place for a block sweep.  Although the inspectors were able to see and write up some fairly minor problems on rental homes, amazingly when it came to the owner occupied houses on this street these five inspectors missed a dozen failed roofs, half a dozen failed porches, a couple of chimneys that looked about to fall and one house that is failing structurally.  Sixteen owner occupied properties in total that were as bad or worse than the seventeen rentals on the street that received orders. They also missed the two abandoned structures that should have been sent to raze, properties with actual broken windows.  My first two trips down the block had city lots strewn with trash.  I’ll guess that they were afraid someone would point that out in a RIP hearing.  They were clean on my third and forth trip.

Of the two properties that I saw blatant drug dealing coming from on three of my trips down the block this fall, one was owner occupied and the other owned by a guy who lives in the district on 15th and Cleveland. Far from the stereotypical absentee landlord.

If the RIP as well as other code initiatives are truly about stabilizing the neighborhoods, then plans must be in place to address the owner occupied and city owned properties that also drag down the neighborhood.

Tim Ballering

Tim@ApartmentsMilwaukee.com

*I consider serious disrepair as failed roofs, dangerous porches, crumbling chimneys and structural failure.

On Nov 30, 2014, on the ApartmentAssoc Yahoo Group  Bill Lauer wrote:

The previous article entitled “Broken Windows” really isn’t about broken windows.  It is about a theory that first showed up in the early 1980s [Link] and influences many of today’s social policies that impact our businesses every day.  Researchers in New York parked a car with no license plates on it, on a busy street. In a very short period of time, everything of value was stripped from it. Likewise, if a window in a building is broken and is left unrepaired, all the rest of the windows will soon be broken. They concluded that somehow the disrepair brought more disrepair.  Likewise, if crimes like jaywalking and panhandling are allowed, then more felonious crimes will follow.

The recent public hearings on the expansion of the Rental Inspection Program indicate several inner-city alders believe that because certain neighborhoods are run down, that crime is attracted to those neighborhoods.  But if memory serves me correctly, these same neighborhoods had huge crime problems before the neighborhoods were runned down.  Could it be that something else attracted the criminal element? Could it be true that because criminals do not maintain property very well that over time, neighborhoods end up in disrepair? They see the disrepair as the fault of greedy landlords, instead of seeing the landlords as the victims of the criminals.

One Alder literally said that the RIP was a tool to break up these “hot spots” of criminal activity. This strategy scatters criminal activity into surrounding neighborhoods rather than deal with the problem where it is. The mayor’s budget hires more building inspectors and reduces the number of armed police, which is contrary to the original research which says that police presence was needed to make positive change.

For the last 20 years, as “hot spots” break up and houses get bulldozed, and criminals need housing, they move into unsuspecting neighborhoods. That is why we are seeing crime increase (again) in Bay View, West Allis, Sherman Park, St, Joe’s area, just to name a few. The strategy employed in the RIP has not worked. But a new generation of politicians refuse to learn the lessons of the past and want to try this stuff again with a new name. They continue to make the buildings the problem rather than the people who live there.

The article is a long read but makes very interesting points that are useful in our discussions with our politicians.  It gives some insight into the crazy policies that are coming from city hall. But most importantly it points to the need for landlords to organize and become vocal about our experience working in Milwaukee.

 Bill Lauer

Nov 13

A different way of municipalities interacting with property owners

In Washington  D.C. they have  The Housing Provider Ombudsman a information resource for small housing providers.

Blacklisting bad tenants

THE NAMES of 400,000 Australian renters have swelled national blacklists for crimes ranging from pouring concrete down toilets to stealing entire kitchens from properties. [Source]

Apr 25

I was having a conversation with a buddy today about the accuracy of the most recent City of Milwaukee assessments and where values are truly headed. I thought it was relevant enough that I turned my email to him with links supporting my views into this post.

The Milwaukee Journal quotes Alderman Mike Murphy who believes our housing market has hit bottom:

“I do think we’ve hit the bottom,” said Ald. Michael Murphy, chairman of the Common Council’s Finance & Personnel Committee. Murphy, Mayor Tom Barrett and Assessment Commissioner Mary Reavey all said they were hopeful that property values would start to slowly rise again over the next few years.

It would be wonderful if that in fact was correct, however there are many indicators that the bottom may still be a ways off.  The Feds are considering forced reductions of mortgages to appraised value.  This will allow owners to sell for less than today and remain financially  unscathed.  Previously if you owed $150k on your home you would fight like heck to get at least $150k, otherwise you would have to pay out of your pocket to sell.  If this becomes policy it will allow owners to sell for much less than they owe today, creating a general downward pressure on all home prices.

Then there is the phenomena of  people who can pay their mortgages, but are simply walking away.  It used to be dishonorable not to pay your debts.  Now it has the cute name of “Strategic Defaults.”  This along with short sales undermine our entire economic system as well as real estate values.  There just isn’t the social pressure to pay what you agreed to anymore.

Finally there is a large shadow market of homes and other real estate that are foreclosed but not on the resale market.  As these enter the market it will further drive down prices. If you want to see the shadow market in action write down the addresses of the obviously foreclosed buildings and homes that do not have broker signs in front of them, look up the ownership on the city site, then look for the property on MLS.  Many will be lender owned, but not actively marketed.

The Milwaukee Journal article reports the Assessor claims the decline in values over last year to be a meager 2.4%  One reader of the Journal article makes a very valid comment:

“Ask any realtor, appraiser, banker, buyer or seller of a home over the past 24 months how much values have dropped, 2.4% is a joke they need to remove the decimal point the acutal number is closer to 24%.”

I concur with this person that the real values of properties, at least in the neighborhoods we own in are dramatically less than the assessed values.  Milwaukee has typically overvalued the lower value neighborhoods in what I believe is a regressive tax scheme to lower the taxes of the more affluent white neighborhoods at the expense of these who can least afford higher housing costs.  The city assessor justifies this by excluding many comps as invalid, while being quite happy to use those homes purchased by first time buyers using down payment grants etc. that hid the true value of the purchase.  Today many of those homes are in foreclosure.

So while Milwaukee officials are hopeful that the end of the decline is nigh, and I too wish this was true as I happen to have a large financial interest in this subject, it probably isn’t so.  Many well studied economist and others believe that the Milwaukee area home prices will return to 2007 values in the fourth quarter of 2017 These same experts found that we are currently 15% off the mark today, not the 2.4% the Assessor has given.  They also predict the slide won’t stop until fourth quarter 2011.

But the city has strong motivation to artificially keep assessed values inflated:  That of course is to maintain artificially high property taxes while at the same time being able to claim that have only raised the mil (amount per thousand dollars of assessed value) by a small percentage.

So while many, including the city officials and  me, “hope” for a housing price recovery soon, hope is not a workable strategy. Please post your comments and challenge my views.  We all have a lot riding on making he best guess here.


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