Two-thirds of Sacramento sales for May were foreclosures

Yes. Two-thirds.

Global Guerrillas reports relevant, if uncheery, news

The Chicago Fed has found that under normal circumstances, every increase in the foreclosure rate by 2.87%, there is a 6.68% increase in violent crime. Further, housing values fall by nearly 1% for each foreclosed home within 1/8 of a mile.

This could lead to what they call The Swiss Cheese Effect

As US cities, suburbs and neighborhoods begin to look like swiss cheese, there’s little doubt that the US will experience a radical increase in the formation of gangs, militias, and other violent groups. A volatile mixture of wealth/expectation destruction, neighborhood decay (due to empty and abandoned properties), and a visceral sense of economic betrayal/abandonment will be the drivers. Connectivity (both local and global) will ensure that the damage spreads virally.

It’s difficult to see how this will not happen, at least in some places.


  1. I may be wrong, but I think we’re already seeing the Swiss Cheese effect where I live. The response on the part of the public that still has a home has been to arm up and shoot first. And they can because our state has adopted the Castle doctrine and along with it a law that eliminates the ability of the decedents relative to file a civil lawsuit in damages. And, it’s working! There was a killing just blocks from our home last week.

    The sad thing about this mess is that if our recent past real estate busts are any indication, the long term effect of this high foreclosure rate situation is that relatively new neighborhoods will never truly recover. Wealthy investor types swoop in and buy up the homes at foreclosure sales and then turn the houses into gov’t assisted rental units. This of course drives the values of surrounding properties even lower. Thus, the long term effect in so many major metro areas which have experienced high growth rates over the last 20 years is that there isn’t a neighborhood left that isn’t a gang infested, high crime rate area. That being the case, it’s no wonder that it’s quickly becoming smarter to rent than to buy and if you do want to “buy to own” you do it a good 150 miles or more away from any major metro area.

  2. Yikes. What state do you live in?

    A lot of this may be at least a bit related to the general feeling in the neighborhood.

    I lived in Venice CA during the L.A. riots of ’92. Venice has a central core area of poor people with serious gang activity. While blocks in other parts of LA burned, Venice itself had practically no damage. At the time, I thought this must at least in part be due to the open atmosphere of Venice where artist lofts are a block from war zones and for the most part, everyone got on fine.

    Maybe what I mean is there was a sense of community. But yeah, when things turn into Swiss Cheese, then the community is long gone.

  3. Bob: I also lived in Venice at the time. My recollection is that they looted the grocery store and the pharmacy on Lincoln, and burned several homes along California, just north of us (and west of you). Several people were killed– one when she was unable to get out of a burning home. Venice was also one of the areas in which National Guard troops were posted in the aftermath of the riots– I still have the photos.

    Personally, I wouldn’t call it “practically no damage.” It wasn’t as bad in Venice as Crenshaw or Hollywood or the LA strip, but it was worse than many other areas (e.g. Santa Monica, also with its core of poverty).

  4. Well then, cancel my perky comment about community in Venice making the difference. I’d thought just a couple of stores got firebombed. Didn’t know about the deaths.

  5. Make sure you understand the landlord tenant laws in your state and have your rental/lease agreements prepared by or reviewed by a good real estate attorney. If there has been a foreclosure, don’t pay rent to the old landlord. Rather, try to find out who now owns the building. Dave

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