Supply/Demand & Cut-Ups

A domestic disturbance call, turned into crack drug bust, has cast a spotlight on the cut-up house phenomenon. It is alleged this multi-unit property was registered with a homestead exemption.

Without focusing on this particular instance, it could be beneficial to understand the implications of how situations like this effect the entire city.

Let's start with the social considerations. Crack, is a devastating drug, crimes like muggings and break-ins become more common, users, need money to finance the next purchase. Crimes like these, sometimes unbelievably brazen, strike at the heart of the community fabric.

Leaving the community becomes an option, people spend less time interacting with their neighbors and become isolated from one another. Quality of life suffers.

Now think of the economic impact. Business, will be hard pressed to invest in areas where they feel. (but might not admit) uncomfortable about the prospects of being burglarized. Insurance premiums will be higher, shrinkage of inventory and store theft will be concerns. That's all before you start talking about the tax consequences.

But what if you attacked to supply side? For starter's, let me state, that as a guy who has been through a large portion of the city, there are some houses in Hammond that are huge. Way beyond the means of the average family and easily convertible into a two or three flat. I have seen buildings in Hammond like the one mentioned above with eight mail boxes by the front door, so there are extreme examples out there.

The phase out of cut-ups, or the process of turning them into safe, accounted for entities should be a top priority of city officials and landlords. Resolving the cut-up house problem, will lower the overall number of rental units and provide additional benefits for the entire city. It is unfair that the owner of a multi-unit building should gain the benefit of a homestead exemption.

Reducing the overall number of rental units, will provide price stability for the remaining units and create incremental price appreciation in all properties. The ability to increase rent, will be enhanced.

If economic conditions I've mentioned in other posts become reality, foreclosed, abandoned, etc. property in Hammond might be one of the first places bargain hunters look. If this was true, it would create incremental price appreciation in Hammond property values. Rental property owners would participate in this positive development, and their ability to increase rent would be enhanced.....................hhmmn