nothin As Speculators Flee, Paley Takes On Winchester | New Haven Independent

As Speculators Flee, Paley Takes On Winchester

Thomas MacMillan Photo

Jim Paley.

Even as New Haven’s more affluent areas recover from the housing crisis, Newhallville is still dealing with boarded-up homes and sinking property values. Enter New Haven’s most seasoned house-rescuer, who says it’s time to double-down on a risky plan to pull the neighborhood back from the edge.

The rescuer is Jim Paley, who for decades has restored neglected old homes in struggling neighborhoods and helped working families buy them through his not-for-profit Neighborhood Housing Services (NHS).

Now Paley’s agency is taking on what might be its toughest challenge: Newhallville’s battered Winchester Avenue corridor and surrounding streets. A new round of speculators are defaulting on mortgages there and in at least one stretch other not-for-profits like Habitat for Humanity have fled, along with the confidence of potential owner-occupants.

NHS recently rehabbed four houses in the area — and for the first time in its history didn’t have buyers lined up when they finished. NHS has never before had more than one unsold house in its inventory at a time, Paley said.

Faced with such unprecedented circumstances, Paley has decided not to retreat, but to advance. He’s spearheading an aggressive re-investment strategy to buy up and rehabilitate clusters of distressed homes on several streets in Newhallville. He aims to support the neighborhood by targeting not just single homes that have fallen into neglect, but groups of homes.

The idea is that you can’t get a buyer interested in a home — even a newly renovated one — if the house next door is boarded up.

It’s not cheap for NHS to hold onto completed homes; until a house sells, the agency can’t recoup its investments and put that money toward other homes.

It’s a risky strategy,” he said. But we can’t afford not to do it.”

On a recent wintry afternoon, Paley took a drive through Newhallville, pointing out the houses NHS has recently purchased or renovated.

There’s growing disparity between the affluent and poor sections of New Haven,” Paley said as he pulled out of the NHS parking lot on Sherman Avenue in his silver Audi station wagon.

In East Rock, housing prices are stable, he said. In Newhallville, however, prices are falling and residents are losing confidence.

After the housing crisis led to foreclosures on homes owned by speculators a few years ago, a new group of speculators moved in to buy up distressed properties in Newhallville, Paley said. (So did an alleged group of scammers who committed mortgage fraud, took the money from the mortgages, and left Newhallville properties abandoned and decrepit.) Now a second round of foreclosures has begun, preventing the neighborhood from stabilizing the way some other areas in town have.

Investors saw they could pick them up for a reduced price,” Paley said. They thought, I’ll wait until the market heats up,” and then sell for a profit. But the market never turned around in Newhallville; developers couldn’t sell, and ended up just dropping them, not paying the bills, and triggering foreclosures.

Everything ratchets down a notch,” Paley said.

NHS is stepping into that second foreclosure round and, competing against the out-of-town speculators, buying up distressed properties in batches. My hope is that we’ve acquired the worst of the lot. But we’re not having success with sales,” Paley said.

We’re hoping tangible signs of investment will trigger other investment,” he said.

335 West Division St.

The first stop on Paley’s Newhallville tour was West Division Street. The little one-way street, which connects Dixwell and Sherman avenues, has only 13 houses on its one-block length. NHS acquired one of them, 335 West Division St., in 2008, when it was in disrepair. NHS rehabbed it, but now can’t sell it.

It’s been on the market for more than a year,” Paley said. One reason is the house on the corner,” he said, pointing out his car window at a boarded up duplex (pictured below). NHS picked up the house six months ago in a foreclosure from Fannie Mae and plans to renovate it.

Down the block, Paley pointed out 319 – 321 West Division, also boarded up, and also owned by NHS as of four months ago. Altogether, NHS now owns four houses in the area.

My plan is this spring and summer they’ll all be under construction,” Paley said. Ideally, the new construction will help turn around a struggling neighborhood.

There have been a number of problems that have beset this area,” he said. The block has seen two homicides in less than a year and a major fire nearby on Dixwell Avenue.

In a small area, the problems are magnified,” Paley said. But, if turned around, a small area can create a strong neighborhood enclave,” he said. That would mean people caring more about their neighborhood, more engaged in local decisions, and more invested.

Paley continued on to Winchester Avenue, where he pointed out three homes NHS recently completed, at 653, 664, and 678 Winchester.

This again is the really concentrated targeting,” Paley said. The problems on Winchester go beyond just three homes, he said. That’s why NHS recently picked up 726 and 838 Winchester.

Paley looped back to Starr Street, by way of Bassett. On Starr Street, Paley got out of the car to point out two more houses that NHS recently picked up. He fell into a conversation with two neighbors shoveling the sidewalk across the street.

Louis Enill (at right in photo) owns the house across the street. He said drug dealers used to live at one of the houses NHS now owns. The neighborhood is a close-knit one, in which people look out for each other, Enill said. We’re looking for a good family to live there.”

Paley told him that the house would be sold only to someone who plans to live in it, not an absentee landlord.

Paley said that buying and renovating one of the houses would cost $325,000, and NHS will sell it for about $185,000.

NHS can afford to do that by taking advantage of a variety of state and federal tax credits and housing programs, Paley explained back in the car. The subsidies are attached to the house in such a way that the buyer cannot turn around and re-sell the house for a profit. We prevent profiteering and flipping houses,” Paley said.

Back in the parking lot at NHS headquarters, Paley described a historical precedent to what NHS is trying to do in Newhallville. In the early 80s, when Upper State Street was characterized by abandoned buildings, two investors — Bob Frew and Ken Krause — saw an opportunity and began buying up properties.

They didn’t do anything until they owned them all,” Paley said. Then they rehabilitated all of them at once and created a market, he said. That’s the same strategy NHS is embarking on now in Newhallville, Paley said. But to stabilize the neighborhood, not to make money.”

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