OAKLAND (CBS SF) — An advocacy group for low-income people issued a report Thursday that says investors are buying foreclosed homes in the poorest neighborhoods in Oakland in a trend that is destabilizing communities.
The report by the Oakland-based Urban Strategies Council entitled “Who Owns Your Neighborhood?” said that 62 percent of the 10,508 completed foreclosures in Oakland since 2007 are either still owned by a financial institution or acquired by an investor.
It said that as of October 2011, investors had acquired 42 percent of all properties that went through foreclosure in the city.
In addition, the report says only 10 of the top 30 foreclosure investors in Oakland are based in the city and 93 percent of all investor acquisitions are concentrated in low-income neighborhoods in the city’s flatlands.
Joining the report’s authors at a news conference at the Rene C. Davidson Courthouse, Oakland City Councilwoman Desley Brooks, who represents part of East Oakland, said investors are paying cash for foreclosed properties, making it difficult for potential homebuyers who can only afford to make a modest down payment.
“These all-cash transactions are squeezing out the little guy,” Brooks said. “These investors are devaluing our community by buying low and selling high.”
“If we allow this to continue to happen it will be a tremendous disservice to our community,” she said.
The City Council’s Community and Economic Development Agency will hold a hearing on July 10 on Brooks’ proposed ordinance that would target firms that leave properties blighted.
The ordinance would require homebuyers not living in their newly-purchased homes to bring them up to city codes or face fines, Brooks said.
The report profiles the two largest Oakland foreclosure investors, Community Fund LLC and REO Homes, LLC, which it says have acquired nearly 500 properties in Oakland since 2007.
The two firms had bought and quickly sold 130 properties as of last October for an average gross gain of nearly $80,000 per property, according to the report.
Many investors complete few upgrades to their acquisitions before they put them back on the market to rent or sell, the report says.
Preeti Vissa, the community reinvestment director for the Greenling Institute, a Berkeley-based multi-ethnic public policy research and advocacy group, said, “It’s alarming to see entire neighborhoods transferring wealth from hundreds of people to the hands of two companies.”
She added, “It’s hugely damaging to communities if homes bought by investors aren’t held to any standards for rehabilitation and upkeep, as well as affordability in both ownership and rental.”
Vissa called for imposing minimal standards for the rehabilitation of homes bought by investors and requiring that a percentage of local people be hired to work on the rehabilitation of those homes.
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