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.