All for One and One for All

In the wake of the most recent foreclosure boom, which has brought about one of the most rapid and unchallenged property transfers since Indian Removal in the 1830s, many are left asking: what can I do with all this bargain real estate? This question has become particularly pressing for those in the banking and investment industries who – contrary to the broader national trends – have experienced a rather substantial influx of capital relative to depreciating property values thanks to recent government reforms under the stimulus package.

The most immediate answer for many has been converting their newly acquired real estate into high margin rental properties and apartment complexes. This does make sense in large, booming cities such as New York and especially the nation’s capital where rising foreclosure rates have accompanied rapid cost of living increases and rising demand for rental housing, resulting in a unique opportunity to rent out foreclosed homes at a rate much higher than the monthly mortgage payments of the previous owner, who may very well become the new tenant, only now sharing half of his or her former home with another family. However, in smaller cities whose centers have been abandoned, many have explored other options and pursued creative solutions. I have heard of cases in which foreclosed inner city homes were converted into homeless or battered women shelters for tax purposes.

All of this is very pragmatic, but it is clear that very few property owners are thinking strategically and collectively about the issue. This is one case in which “every man for himself” seems an imprudent policy. We should be saying "all for one and one for all." Whole city blocks could be consolidated, and with unemployment where it is, it may even be feasible start building factories again for the first time in decades. This is just one of many options; however, it is imperative that we do something substantial and innovative with the opportunity we have created for ourselves. Some large conglomerates of bankers such as Bank of America have been leading the way, and my hope is that others will follow.