The city of Milwaukee’s growing presence in the real estate business is raising questions about government’s role in the private market.
Milwaukee is considering funneling $3 million in federal money to the city’s subsidiary company, which uses federal grants to buy foreclosed and vacant houses and sell them to new homeowners.
The plan has potential positives and negatives, said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors.
“As an emergency type of thing, it might work,” he said, “but I don’t think as a long-term proposition it would be anything people would support.”
The public land bank could help private real estate agents in the city by fixing broken down, vacant houses that are hard to sell, Ruzicka said. Or the land bank could hamper the private market’s shift toward converting owner-occupied houses into rentals, he said.
The city last year created Milwaukee Neighborhood Reclamation Co. LLC, which buys houses and hires companies to maintain or rehabilitate them. The goals are to have homeowners, not renters, move into the houses and to prevent investors from buying houses and renting them out after doing minimal repairs, said Steven Mahan, director of Milwaukee’s Community Development Block Grant administration.
“We’re not looking for speculators to own and milk properties,” he said.
Although the $3 million city aldermen are considering this month is a relatively small amount, the land bank still could compete with private companies, Ruzicka said. The demand for apartments is increasing nationwide, he said, and some companies are responsibly buying and renovating houses for rentals.
Ruzicka suggested the city leave houses on the market for a specific period so companies have a chance to buy the properties.
“We don’t want to necessarily preclude property owners from increasing rental properties,” Ruzicka said.
The land bank started buying properties in December and so far has five, with accepted offers to buy three more, said Cindy Kuhs, who is working as a real estate agent for the city’s company.
On the positive side, Ruzicka said, the city land bank could play an important role in the inner-city housing market.
“What I would really like to see them do is buy up the properties that are really in bad disrepair,” he said, “and have been vacant for over a year.”
The city land bank is doing the work the private sector cannot and will not do because the projects are not profitable, said Kuhs, who also builds and sells houses in Milwaukee as owner and president of Kuhs Quality Homes Inc., Greenfield. She said the land bank is a good way for the city to step in.
“I see that the government is the only one that is going to be able to do this, unfortunately,” she said. “There are a lot of investors coming into the market and buying these homes. But they’re not doing much to them.”