Milwaukee: The $5,000 House and Other Thoughts

I was having lunch the other day with someone who works in city government, and we were talking about the serious foreclosure problem in Milwaukee. He was lamenting the fact that in some of the poorest sections of the city, the housing market is fundamentally broken. Homes, now owned by the city, can be purchased for as little as $5,000 and yet they still aren’t selling. If you want some sobering evidence of the magnitude of the nation’s housing market collapse and the impact of the Great Recession, check out the listings. They’re stunning, really.

Mayor Tom Barrett estimates the foreclosure crisis has cost Milwaukee $5 billion dollars in assessed value. The city has tried to get a handle on the problem, but it persists, eating away at once-stable neighborhoods. In 2008, the mayor launched the Milwaukee Foreclosure Partnership Initiative, which tries to prevent foreclosures and stabilize neighborhoods.  There’s a branch of city government that directly addresses housing issues. And last week, the mayor announced he would be committing another $2.3 million to address the foreclosure problem. As part of that initiative, scores of empty homes will be torn down because they’re a blight on city neighborhoods. As a longtime Milwaukee resident, I’d be less than honest if I didn’t say the specter of Detroit came to mind when I heard the news.

But the next Detroit is hardly the image thousands of newcomers have of my hometown. After losing 20 per cent of its population from 1960-2000, Milwaukee is growing again. It’s not a population explosion, but it’s growth. Recent census numbers show that from 2010 to 2012, the city added 4,000 residents. What’s most interesting is who’s choosing to live in Milwaukee. Reporting by the Milwaukee Journal Sentinel (part of a collaboration with Marquette Law School) found that in the last decade, there has been a migration of young people to the city. Many are college graduates. They live downtown, on the city’s east side, and in “hot” neighborhoods like the Third Ward, Walker’s Point, Bay View, Brewers’ Hill and Washington Heights. Their presence has brought a new energy and economic vitality to parts of Milwaukee, with restaurants and shops racing to meet the demands of younger consumers. These newcomers are helping fuel a change in Milwaukee’s risk-averse entrepreneurial culture, and have created a dynamic arts and entertainment scene. Their arrival is also welcome news to established Fortune 500 companies like Northwestern Mutual, which is planning a new skyscraper for its downtown campus, along with hundreds of news jobs.

To be sure, none of this diminishes the enormous challenges our city faces. Can a city truly be great when some neighborhoods are so undesirable that homes sell for $5,000 or less, while others are so prosperous that apartments regularly rent for $2,000 a month or more? It’s hard to make the case for greatness when you have such jaw-dropping disparity in income and housing.

So what role, if any, should government play in addressing the challenges facing Milwaukee? During the last gubernatorial race, Governor Walker said other towns and cities in Wisconsin “don’t want to be like Milwaukee.” It’s true that you don’t have to travel far outside the city to hear that sentiment expressed, sometimes a bit more bluntly. It’s also true these other places can’t be like Milwaukee. We’re simply bigger and more diverse, our problems larger and more complex. But no matter how people feel about Milwaukee, its future matters. In a recent interview with the Cap Times, the retiring director of the University Research Park in Madison, Mark Bugher, said, “The secret to the Wisconsin economy is still Milwaukee.” Bugher is a Republican, a former member of Governor Tommy Thompson’s administration. “My advice to elected officials,” he said, “is to do all you can to help the Milwaukee economy, the school district, the infrastructure there. That will pay dividends for the balance of the state.”

There are no easy answers to Milwaukee’s foreclosure crisis. But Bugher’s larger observation is worth noting: Milwaukee, with its chaotic mix of dirt-cheap houses and million-dollar condos, its Fortune 500 headquarters and underemployed workforce, offers plenty of challenges. But it also offers plenty of potential. And it may offer Wisconsin its best chance for economic success in the future.





This Post Has 4 Comments

  1. Tom Kamenick

    Maybe if the city is finding that it can’t sell – practically can’t give away – these properties, it should reconsider restrictions like these:

    Buyers are required to bring property into building code compliance immediately after sale. Owner occupancy sales will include a deed restriction requiring owner occupancy for five (5) years. Investor owner sales will include a deed restriction prohibiting the sale of the property to another investor owner for five (5) years. A sale of the Property within this 5-year period would be permitted to an owner occupant at any time, with that owner occupant being required to maintain this property as his or her primary place of residence for the remainder of the 5-year period of time. . . . . All showings and offers must be handled by a licensed real estate agent.

  2. Nick Zales

    I like Milwaukee. I have lived here for 27 years. Whether the city is “great” is irrelevant to me. That is opinion. Imagine buying a house with a credit card? But as Tom Kamenick points out, those houses require extensive repairs. Moreover, most of those houses are located in a lousy part of the city that people do not want to live in by choice.

    One thing Milwaukee government could do to help is lessen the tax burden on residential property. Property taxes in Milwaukee are sky high and that harms everyone.

    One major problem is no one really cares about the poor people who live in the central city where those houses are located. Without good jobs, that area will remain depressed. Perhaps the city should simply start raising delapitated houses and turn those blocks into parks. Increasing the tax base should not be the city’s goal. The goal should be increasing the quality of life and more taxes are the antithesis of that goal.

  3. Andy Moss

    Thanks for writing this blog. I’m glad to see someone publicize the fact that Milwaukee’s future is going to be very important to Wisconsin’s future.

    I do not favor a widescale policy of housing demolition. Let’s let neighbors’ comments and interactions with city officials influence which houses are saved and which are torn down. Remember, tearing down all these houses is going to cost a lot of tax money, too.

    The reason property taxes are high in Milwaukee is that many successful businesses have moved out to the suburbs or elsewhere. We have a great supply of workers in Milwaukee but they need jobs they can reach.

    As for the restrictions that Tom Kamenick points out, I favor selective experimentation with these, but we have to recognize the problems. If a buyer takes over a property purely speculatively without investing in making it habitable, that will not lead to a more liveable city such as Nick Zales rightly names the goal.

  4. Nick Zales

    We have to do something with blighted houses. If no one is willing to fix them up, then we should get rid of them. The problem is geography. Most of these houses are in places where most Milwaukeans do not want to go, park or not. There is no easy answer, but doing nothing is not the answer.

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