Even some of the sharpest folks [Or perhaps I should say ESPECIALLY the sharpest folks] in real estate have gotten out of house "flipping". In a declining economy, with a glut of homes on the market, and financing difficult- it’s next to impossible to have flipping make financial sense. That doesn’t stop government from wanting to get in the business though. On May 8, Representative Maxine Walters (D-CA) posted these comments about legislation she had introduced on her website:
By a vote of 239-188, the House passed The Neighborhood Stabilization Act (H.R. 5818), which authorizes a $15 billion federal grant and loan program to help state and local governments purchase, rehabilitate, and resell or rent foreclosed homes.
“To understand the urgent need to enact this legislation, you just need to visit — as I have —communities like Cleveland, Detroit, or the San Bernardino and Stockton metropolitan areas in California, where block after block is dotted by foreclosed properties, many of them suffering from neglect or actual vandalism. These abandoned and foreclosed properties drag down the value of the homes still occupied by working families, contribute to a cascade effect whereby plummeting home prices erode the tax base of state and local governments and harm real estate related industries such as the construction trades,” Congresswoman Waters said.
Using well-accepted construction activity multipliers, the National Foreclosure Prevention and Neighborhood Stabilization Task Force calculates that the bill’s proposed $15 billion investment will generate at least $38 billion in direct and "ripple effect" economic activity nationwide, employ 120,000 people, and restore nearly $225 million per year in local government real estate tax collections.
Reality often doesn’t work as well as theory. From today’s Toledo Blade:
In the midst of a national foreclosure crisis, the Toledo-based Neighborhood Housing Services has been buying more houses than it can afford to rehabilitate, Executive Director Bill Farnsel said.
Residents living next to two of the agency’s vacant properties say the houses’ conditions attract rats and other vermin, as well as thieves and loiterers.
And the neighbors say they’re sick of it.
"[NHS] should be prosecuted," said Dave Geoffrion, who lives on St. Louis Street in East Toledo. "They should be forced to live in that house with the rats and the mice and the groundhogs."
The agency is a nonprofit community development corporation that buys foreclosed houses, fixes them up, and offers financing to low-income and middle-income people so they can buy the properties.
So what happened?
In 2005, [the agency] bought two houses at 453 and 505 St. Louis St.
"At the point and time we bought them, we thought we would be able to get the financing," Mr. Farnsel said. But in 2006, when the foreclosure crisis forced the agency to seize many of the houses its delinquent homeowners abandoned or couldn’t pay for, the agency didn’t have any collateral to purchase lines of credit from local banks. "We thought we’d be able to access enough credit to do those houses," Mr.Farnsel said. "We can’t obtain the credit right now because there’s no market."
Homes are going into foreclosure in many areas, not because potential buyers don’t like the color schemes, but because as Farnsel indicated, "There’s no market." Apparently even previously renovated homes are going into foreclosure.
Rep. Walters said of the Neighborhood Stabilization Act and others currently being considered:
“These bills are forcing the Congress to have to deal with this problem … we’re trying to teach them that many people who got into these loans didn’t simply make bad decisions. They were tricked into these loans!” the outspoken congresswoman declared.
Do we assume then that when homes sold by agencies such as Toledo’s Neighborhood housing services go into foreclosure, borrowers were tricked by these agencies as well?
It is said that "Fools rush in where angels fear to tread." Apparently the same can be said of our government and the housing market. When the problem is excess supply in an area of low demand, Congress should understand a little paint and paper isn’t going to fix the problem.
Bubble Meter
Northern Virginia Housing Bubble Fallout
Mish's Global Economic Analysis
Ohio Fraudclosure
UK House Bubble
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
Here are some tried and true recommendations for the “gubmint” to add to the recipe:
1. Armondo’s study course
2. An HGTV reality show
3. One of dozens of “bootcamps” (if any are still around)
4. Enrollment in Nouveau Riche “university”
5. Get some advice from a REALTOR
6. Have the potential buyers get some advice from a REALTOR
7. Bury one of those statues in the yard (upside down, of course)
8. Pull out the “if it just helps ONE child” line, and confiscate a few hundred million tax dollars. We can’t say no to anything that might help one child, or we’d be barbarians!
9. Print off Yun’s forecasts for appreciation and leave them on the counter during the open house
10. Outsource the whole project, start to finish… to Halliburton
11. Hey, it’s the government! (or gov’t agency)
If you want to do it… if you think you’ll get even a sliver of positive publicity from doing it… then by all means, do it! You don’t need it to make sense when you’re the government!
Maybe these proven tips would help them out?
Too bad they let felons vote in Cally. Them and the a vote for cigarettes crowd. Without them we would never have heard of this racist pig
Asset Hunter-
I see your NAR training is paying off! : )
Igor- No it’s not that AH has “no idea”- he’s just kidding!
When I was a little kid struggling to do something, my dad would laugh at my facial expressions and tell me “Keep trying. You’re just not holding your mouth right”. Even when he knew it was something I couldn’t possibly do.
As politicians and posters pronounce their super-genius plans to stop this ongoing slow motion train wreck of our economy, I can’t help but laugh and think “Well Dad, I know how to hold it now.”
I don’t believe anyone is smart enough to stop or even significantly lessen the overall effects of the Great Leveraged Finance Fiasco but that won’t stop them from trying.
Igor says noclue
Yeah, I’m still a “secret agent” for the NAR.
That means I’m a member, and in AZ an agent, but I keep it a pretty strict secret!
I just wanted a front row ticket… not a stigma or a label!
On the drive through Denver or Colorado Springs yesterday, I saw a billboard that said:
“WHEN IS THE BEST TIME TO BUY AN xxxxxx HOME? NOW!!!”
(I can’t remember the homebuilder, but it probably doesn’t matter anyway.)
Drove through Denver, CO Springs, Albuquerque, Flagstaff and into Phoenix all within 24 hours.
Now if I can hit Vegas, LA & San Diego, that should almost qualify me for some kind of “bubble bust tour” ribbon!
that 15 billions dollars should be used to purchase bulldozers and just level the places that are not fit for living anymore.