A new study released today by HousingWorks RI says Central Falls, Woonsocket and Pawtucket ranked among the top four communities with the highest foreclosure rates from 2009 through 2011, with multi-family homes bearing the brunt of the blow.
The third annual “special report” on foreclosures says Central Falls topped the list, with 158 foreclosures, or 13.6 percent of the square-mile city’s mortgaged housing stock. Woonsocket ranked third, generating 339 foreclosures, or 8.2 percent; Pawtucket, fourth, with 595 foreclosures, or 6.5 percent. Providence was second, with 1,672 foreclosures, nearly a tenth of its mortgaged housing stock.
Statewide, multi-family housing generally accounted for about a third of foreclosures, but that rule doesn’t hold in the old northern Rhode Island mill cities, where tenements make up a dominant component of the housing stock. In Central Falls and Woonsocket, the multi-family foreclosure rate was closer to half, and in Pawtucket, two thirds.
“With multi-family homes making up close to one third of Rhode Island’s actual foreclosures, many renters have been impacted by the threat of eviction, and over 6,300 rental homes have been lost,” the study says. “The increased demand for apartments coupled with a decreased supply has made affording a quality rental home much harder for Rhode Islanders.”
While distressed cities like the Blackstone Valley triad were particularly hard hit, the study shows that even the comparatively wealthy havens of the suburbs weren’t immune from the housing crash.
Lincoln, for example, ranked 12th in foreclosures, with 113, or 2.5 percent of its mortgaged housing stock; Burrillville, 13th, with 76, or 2.37 percent; and Glocester, 14th, with 58, or 2.35 percent. Cumberland checked in at 21st, with 127 foreclosures, or 1.73 percent.
From a real estate perspective, North Smithfield may have been the most recession-resilient community in the Valley, weighing in with just 45 total foreclosures, or 1.6 percent, for a rank of 25th among the 39 cities and towns.
The study ranked foreclosures as a percentage of mortgaged property because it was the only way to obtain an “apples to apples” comparison adjusted for size differences in the housing stock of various communties, HousingWorks RI said.
The study said that since 2007, for 15 consecutive quarters, Rhode Island consistently had the highest rates of foreclosure and “seriously delinquent” loans in New England. By the fourth quarter of 2011, however, Rhode Island was still leading the region in foreclosure initiations, but Maine and Connecticut pulled ahead of the Ocean State on seriously delinquently loans.
Nevertheless, the study says that after leveling off slightly in 2010, foreclosures increased in 2011, with over 2,000 foreclosure deeds filed.
HousingWorks RI says the figures are both a mirror of the poor economy and a significant impediment to a turnaround. High foreclosures also threaten the quality of life in neighborhoods with increased vacancy rates, blight and crime. And rental housing continues to grow less affordable as multi-family foreclosures simultaneously reduce the supply of apartments while increasing the demand.
The high rates of multifamily foreclosures have made the rental housing more “one of the most vulnerable segments of our economy,” the study says. “Forty percent of Rhode Islanders rent their homes, and 1 in 4 of those renters is extremely cost-burdened, spending more than 50 percent of their income on housing expenses.”
Nellie Gorbea, the executive director of HousingWorksRI, says the figures are the fruit of a housing market that was uniquely vulnerable before the housing bubble burst around 2006. The scale of the mess is directly tied to the shortage of affordable housing that existed before the run-up in housing prices, she said.
Had affordable housing made up a larger share of the state’s housing stock before the crash, she said, Rhode Island would be weathering the storm considerably better than it is now.
Gorbea says that the best way to stabilize the housing market is to make long-range investments in the development of affordable rental property, something the state hasn’t done since the $50 million Building Homes Rhode Island Program of 2006.
Gov. Lincoln Chafee now proposes a downscaled plan for a $25 million program as part of his $7.9 billion state budget. If the legislature keeps the housing funds in the budget, the proposal would be handed off for approval by voters in a statewide referendum in November.
But Gorbea says the initiative is only “a first step.” Her agency is lobbying members of the legislature for a $50 million, affordable housing bond.
Not only would doubling down on the investment enable the state to create more affordable rental housing, it would serve as a mini-boon for workers in the stagnant construction and housing trades sector, she said.
“This would be an opportunity for communities like Woonsocket, Pawtucket and Central Falls to see some economic activity as a result of an investment in these bond dollars,” she said.
In 2006, the $50 million Building Homes bond led to the construction of 1,255 homes through 2011, according to Gorbea. Over 50 percent of the money was spent to rehabilitate abandoned and foreclosure properties, turning hard-to-sell eyesores into market-ready assets for lower-income buyers.
The study concludes that more affordable housing is a critical component of a comprehensive economic development plan.
“For Rhode Island to remain truly competitive in attracting and retaining businesses and growing a vibrant workforce, the state must elevate long-term affordable housing into its overall economic development strategy and develop a consistent funding policy for long-term affordable housing development,” it says. “Investment in affordable housing programs will help the state emerge from the foreclosure crisis economically stronger.”