Some boomtowns face rising crime

In Youngstown and other hot markets, rising property values have brought the added burden of more crime.

By Jeff Cox, CNNMoney.com contributing writer

NEW YORK (CNNMoney.com) -- Browsing through the real estate listings in Youngstown, Ohio, is a bit like taking a trip back through time.

Here's a two-bedroom modified Cape Cod, asking price $17,000. A three-bedroom ranch with 1,352 square feet of living space lists for $19,900. Then there's the high end of the market: a three-bedroom ranch with a one-car garage: $89,900.

pic
Rising property values have brought an unexpected surge in crime in some of the nation's hottest real estate markets.
Best places to live
Mortgage Rates
30 yr fixed 3.80%
15 yr fixed 3.20%
5/1 ARM 3.84%
30 yr refi 3.82%
15 yr refi 3.20%

Find personalized rates:
 

Rates provided by Bankrate.com.

Those are not typos. We didn't forget to add any zeroes. In a land where a typical home these days sells for about $225,000, which is the national median, you can still get a nice place in one of the nation's hottest real estate markets for less than $100,000 - in some cases, much less.

Yes, Youngstown's housing market is booming. The region ranks first in the Midwest in projected growth, with a 3.8 percent gain forecast for 2007, according to the latest estimates by Moody's Economy.com and financial services firm Fiserv Lending Solutions prepared for Fortune magazine. The projected change in direction for Youngstown's market comes after a 2006 that saw a modest decline in property values.

But the city's long-delayed real estate boom has brought with it rising crime, contradicting the popular notion that rising property values usually go hand in hand with falling crime rates. Burglary, larceny and car theft have shown the biggest increases in the region.

A typical house in Youngstown sold for about $80,000 in 2006 - roughly a third the national figure, an enticement for investors and buyers with limited budgets.

Yet crime in the northeastern Ohio city (population 77,747) has been increasing steadily and substantially.

Violent crime in Youngstown rose 10 percent in 2005, while property crimes - things like burglary and arson - jumped more than 20 percent from 2004 to 2005, according to the latest figures from the FBI's Uniform Crime Report.

Similar numbers are visible in other markets where real estate prices are predicted to rise fastest.

Syracuse is considered the second-hottest market in the Northeast but saw a 12.6 percent jump in property crime from 2005 to 2006, according to FBI statistics.

And the rise in crime isn't limited to the Northeast. Three of the top four markets in the South saw property crime rates jump last year. And Wichita, the second-hottest market in the Midwest, saw a 17.4 percent surge in violent crime last year. Rochester, N.Y., the third-hottest market in the Northeast, saw violent crime soar 19.3 percent in 2006, according to the FBI.

So what gives? Are cities like Youngstown victims of their own growth, or is something else at play?

"Youngstown is considered a shrinking city, and because we're redefining ourself ... it's our neighborhoods that are still dealing with poverty issues, low employment and underemployment that are experiencing the crime," said Jason Whitehead, chief of staff for Mayor Jay Williams.

The reform-minded Williams took office in 2005 as the city's first black mayor - and one bent on restoring the city to its former prominence as an industrial hub and a place where families could live in relative safety and security.

Among his targets was a wasteland of vacant properties that had become nesting places for drug addicts and their suppliers. Thieves looking literally to rip off copper piping for resale on the black market also found the empty homes easy marks.

Youngstown's population, which peaked at 170,000 in 1930, when the steel industry was still growing, sank to 77,000 the year before Williams took office.

Now, according to Whitehead and other community leaders, the city is turning around despite its disturbing crime numbers - and is using affordable housing as the linchpin.

Frank Weston, president and owner of ERA Tri-Sun Real Estate and a supporter of Williams's efforts, has benefited from the renewed interest in Youngstown's housing market and doesn't think the crime statistics will be a deterrent.

"The bulk of my buyers are investors who come from all over the country, primarily from California. They see the potential to purchase a home at a greatly reduced price, so they are persuaded more on price per square foot versus what the crime rate is," Weston said. "They have no intentions on living here. The crime rate isn't a factor to them personally."

Whitehead predicts the crime numbers will drop in 2007 as the mayor's initiatives take effect and neighborhoods improve. While acknowledging that crime will continue to be a problem where economic disparities persist, he insists the city is moving in the right direction.

"Beyond the domestic violence and quality-of-life issues, we've not seen an increase [in crime] in newer neighborhoods," he said.

In Albany, N.Y., crime rates show a dichotomy, with property crimes dropping in 2006 while violent crimes rose 11.3 percent, aggravated assault being the big gainer in the New York state capital of 94,000 people.

Albany ranks fourth in the Northeast for projected growth in real estate value at 3.7 percent, according to Moody's and Fiserv.

James Miller, a detective with the city police force and its public safety spokesman, believes growth in the local real estate market is happening primarily in the suburbs.

Miller, like others in law enforcement, said a surge in new housing can be a big fat target for a burglar looking for a quick payday.

"I think it would be standard that most people would want to live in a good neighborhood and good city. The biggest components of that are crime and schools," he says. "When you have new developments cropping up and new houses being built within that development of course there's going to be that opportunity, that potential for houses to be broken into."

In El Paso, Texas, housing prices are projected to gain 7.1 percent, making it the second-hottest market in both the South and the country. Yet, the city saw a 4.5 percent gain in property crimes last year, something Javier Sambrano, the public information officer for the El Paso police department, attributed to people leaving doors unlocked and other "crimes of opportunity."

Baton Rouge, La., in its post-Katrina rebuilding efforts, can expect a 4.5 percent rise in real estate prices this year, according to the survey, but saw a 10.4 percent hike in violent crime in 2006, fueled largely by a jump in aggravated assault cases.

Sgt. Don Kelly, spokesman for the city's police department, said the influx of flood refugees makes drawing a correlation between property values and crime rates difficult. "When you have half a million people looking for a place to stay ... I don't know that that situation has duplicated itself in any other city," he said.

Still, as once-depressed cities grow, the need for a corresponding increase in services, including police protection, is clear. Cities unable to keep up will soon find themselves grappling with difficult quality-of-life issues.

"Areas grow and the city services can't keep up with it. They're behind the curve for a while until they hire more public safety," said Patrick Clancy, vice president of law enforcement for LoJack Corp (Charts)., a Westwood, Mass.-based maker of vehicle-tracking systems that help police recover stolen cars, trucks and construction equipment.

"I think you could go anywhere in Florida, Texas, the Southwest, Phoenix, and you'll see the same type of thing," he said, referring to the easy target that houses under construction and vacant homes make for thieves.

"Pretty soon police departments are overmatched and they have to add more police to protect the properties. There's definitely a learning curve there."

The new rules of real estate

Home builder: No sign of recovery

Growth states: Arizona overtakes Nevada Top of page



Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.