In the Hawthorne neighborhood in north Minneapolis, promise and despair seem to alternate from block to block.

One intersection at 31st Avenue and 6th Street N. is blossoming with optimism. New homes are going up, others have been rehabilitated, a 43-unit apartment building is under consideration nearby, and last year, former President Jimmy Carter came to the neighborhood to pound nails for a Habitat for Humanity project.

"Three or four years ago, you could call it the worst block in Minneapolis," says Jeff Skrenes, the housing director for the Hawthorne Neighborhood Council. The block had a stretch of boarded, vacant buildings, and drivers once rolled through the intersection for fear of stopping. Now it's safe to walk, Skrenes says.

Still, there's another side to the Hawthorne story. A new study of north Minneapolis paints a grim view of Hawthorne, where 57 of 58 blocks show a below-average "housing index," making it among the most problematic of the North Side's 12 neighborhoods. The study uncovered a combination of deteriorated housing, a 10 percent vacancy rate, a 48 percent drop in housing market value over the past 3 1/2 years and only 33 percent owner-occupied homes.

But the report shows that housing conditions on the city's North Side vary widely, with some vibrant areas like the Victory neighborhood where all 76 blocks have an average or above-average housing index.

"To make sweeping generalizations about the whole North Side is something we have been frustrated with for years," says Debbie Nelson, coordinator of the Victory Neighborhood Association. Nelson considers the new report "a good reflection" of Victory, which borders Robbinsdale in the northwestern corner of the city.

The report was produced by the Folwell Center for Urban Initiatives, associated with the Folwell Neighborhood Association, and was funded by a grant from the Pohlad Foundation. The Center for Urban and Regional Affairs at the University of Minnesota conducted the statistical research. The report's recommendations were prepared by Roberta Englund, executive director of the Folwell and Webber-Camden neighborhood associations.

"It's a way of looking at neighborhoods more intelligently and more compassionately," says Englund. "You can't guess your way into a good city."

The report recommends that Minneapolis enact policies and ordinances that provide incentives for responsive rental ownership, focus on increasing home ownership, and encourage redevelopment through more flexible zoning in areas of significant housing deterioration.

Despite good intentions, some philanthropic investment in home ownership in Hawthorne and other north Minneapolis neighborhoods "couldn't work," Englund said. She said "there is going to be no stabilization that is going to be built on the back of existing owner-occupancy" in some areas.

What's needed, she said, is well-managed rental property, combined with new single family homes on side streets that are owner-occupied. She said there needs to be far fewer absentee landlords of single- family units.

The report traces the current state of North Side housing to the turnover of the neighborhood from owner-occupied to rental homes, and several waves of speculation and foreclosures.

Fraud, tornado hurt

Housing pressures were exacerbated by the demolition of the Sumner-Olson public housing complex in the late 1990s that led to many of those residents moving to rental units elsewhere on the North Side.

Market values of homes rose to historic heights from 2001 to early 2005, bringing with it more outside investors along with major real estate fraud. Beginning in early 2006, as property values began to plummet, there was an avalanche of repossessions, evictions of tenants and buildings that ended up vacant and boarded.

More than 3,000 foreclosures took place on the North Side from 2008 through 2010.

"One result of foreclosures in these neighborhoods was the second onslaught of investors who bought homes as they emerged from the redemption period at the bottom of the market, both in cost and condition," the report says. "Many houses were licensed for rental with no improvements and were immediately occupied by any tenant who could pay the rent."

There was another foreclosure upsurge in 2010, discouraging home ownership, the report says. Adding to the woes, a tornado struck the heart of the North Side last May, damaging hundreds of homes.

Investor-owned, single-family homes put up for rent "has posed the biggest challenge to the housing market in the last 30 years," says Tom Streitz, housing policy and development director for Minneapolis. To stem the tide, the vast majority of city-supported rental projects for the last 10 years have been developed by nonprofits, who are responsible landlords, Streitz said.

Marina Lyon, director of the Pohlad Foundation, said her organization has given $1.4 million in down payment assistance, and $500,000 in interest-free home improvement loans since 2009 in north Minneapolis. Lyon said the study will improve the foundation's focus on where to put its money.

Changing perceptions

"What is daunting for me is how to change perceptions and get people to move in," says JoAnne Kelty, chair of the Hawthorne Neighborhood Council. "We have probably built 40 new homes in the last 10 or 15 years on vacant lots. I thought we were making great progress until the foreclosures hit."

The 2010 U.S. census shows Hawthorne's population of 4,567 is 48 percent black, 19 percent Asian, 16 percent white, 9 percent Latino and 1.5 percent American Indian.

Burglaries are up in Hawthorne this year, but they are up across north Minneapolis, says Rowena Holmes, crime prevention specialist with the police department's Fourth Precinct. But she says the community cares, noting that a crime and safety committee meets monthly to discuss problem properties and neighborhood livability issues and 50 people attended a recent workshop on burglary and theft prevention.

In the first 10 months of this year, one homicide, nine rapes, 54 robberies, 68 aggravated assaults and 139 burglaries were reported in Hawthorne.

"Hawthorne has a lot of rental property and a lot of property that is substandard," Holmes said. "They have a lot of challenges and it shows in the statistics."

Randy Furst • 612-673-4224