Is Bulldozing Foreclosed Homes the Path to Urban Prosperity?

The New York Times’ on-line forum “Room for Debate” (October 26, 2011) takes on the practice of banks handing over foreclosed homes to cities so they can be bulldozed. On the one hand, this seems like a rationale practice: vacant homes depress property values of nearby homes, making the neighborhoods harder to revitalize. But, the downside is that cities could be cutting off their nose to spite their face by destroying economically valuable assets. If banks want to unload the houses, they should sell them at a market-clearing price or undertake the costs of razing them instead of shifting it to the publc sector of land banks. I weigh in on the discussion here.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.