There goes the neighborhood

Bank foreclosures and abandonment are causing high home vacancy levels in neighborhoods across the country. Scott Pelley travels to Cleveland, a city that's fighting back against blight.

Across America, recession-fueled foreclosures and plummeting home values have left countless properties abandoned and vulnerable to looting. As Scott Pelley reports, the problem has gotten so bad in Cleveland, Ohio, that county officials have demolished more than 1,000 homes this year - and plan to demolish 20,000 more - rather than let the blight spread and render nearby homes worthless.


The following is a script of "There Goes The Neighborhood" which aired on Dec. 18, 2011. Scott Pelley is the correspondent. Robert Anderson and Daniel Ruetenik, producers.

Chances are the home you're in isn't worth what it used to be. You may not have indulged in the real estate bubble with its liar's loans and Wall Street greed, but you were stuck with the bill. Home values have dropped so far, so fast, that nearly 25 percent of mortgage holders today owe more than their house is worth.

And with unemployment so high, so long, many face foreclosure. If you thought your home value couldn't drop any more, have a look up and down the block. You might say, "There goes the neighborhood." The new threat from the great recession is the sudden surge in the number of abandoned houses. Vacant homes have become so ruinous to some neighborhoods that one city, Cleveland, decided it had to find a solution.

Perfectly good homes, worth 75, 100 thousand dollars or more a couple of years ago, are being ripped to splinters in Cleveland, Cuyahoga County, Ohio. Here, the great recession left one fifth of all houses vacant. The owners walked away because they couldn't or wouldn't keep paying on a mortgage debt that can be twice the value of the home. Cleveland waited four years for home values to recover and now they've decided to face facts and bury the dead.

Why destroy them? Jim Rokakis, a former county treasurer, showed us.

Jim Rokakis: We're looking at a neighborhood that has almost as many vacant houses awaiting demolition as there are houses with people living in them. We have one here. One here. One here. One there.

Rokakis is leading the effort to tear down thousands of abandoned homes because they're rotting their neighborhoods from the inside out. It often starts, he told us, when a vacant house becomes an open house to thieves.

Scott Pelley: It's a nice house from the roof to about here. And then down here it's been ripped to pieces. What's goin' on?

Rokakis: Well this is typical because this is as high as they could reach without using ladders. They ripped off the aluminum siding, which you'll see on most of these houses. The aluminum and the vinyl siding comes off. It's getting' about a buck a pound.

Pelley: Essentially foreclosure scavengers have been through here?

Rokakis: The thieves have gone high tech. They know when evictions are occurring 'cause they're posted online. And they will follow the sheriff. They're usually there that afternoon or that evening.

Rokakis: So, in here, what you're gonna see, well. I guess they took everything including the proverbial kitchen sink, right? The sink is gone. The plumbing is gone in this house. All the copper. Anything metal that had value is gone. The furnace is gone.

Pelley: The light fixture--

Rokakis: Light fixture came out--

Pelley: Is gone. How often is this happening in Cleveland?

Rokakis: This happens every day. And the foreclosure crisis creates this spiral, because as a result of this people are now more likely to leave neighborhoods like this. And as they leave, the scavengers come in and do the same thing to the house next door or across the street.

To make the house next door, worth more instead of less, vacant land created by demolition is often given to the neighbors, and sometimes turned into fields or gardens.

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