Lenders, homeowners and even real estate agents are having a hard time selling properties. Apparently a number of cities now think they can do it better:
As a wave of home foreclosures courses through the United States, some of the nation’s hardest hit cities think they have found a way to ease the blight left on their communities by the crisis.
Using taxpayer and private money, Boston, Minneapolis, San Diego and a handful of other places are buying foreclosed properties to refurbish and resell them to developers and homeowners in an effort to prevent troubled neighborhoods from sliding into urban decay.
The efforts so far have been taken on a small scale. But local officials say they can become an important pillar of any housing recovery with the help of $4 billion in federal grants that were part of a housing bill Congress approved in July.
The housing market has been hammered by an excess of properties for sale, not enough buyers, difficult financing, and pricing in many areas is still out of line with local incomes. While cities might be able to subsidize sell homes for less than their purchase price, that will hardly serve to prop up local home prices or limit further foreclosures.
This will end up being another waste of taxpayer money.
A better way to go, that they’re trying in Buffalo, is to fine the heck out of people with delinquent properties, with an accelerated repo program. That way, they fight blight, and possibly take over the house for free after about a year. Then they can refurb them and sell them for the cost of the refurb. Kills housing values, but keeps the neighborhoods from imploding in the meantime.
netdance – How does that keep neighborhoods from imploding? Seems to me that you could easily cause two problems. First, by fining people out of existance the moment they run into trouble, demand for homes in your city could turn significantly lower.
Second, selling the home for just the cost of the refurb is likely to be well below the “real” value of the home, you run the risk of basically turning the area into a slum. This could further drive the other owners out of their homes, lowering prices even more, and taking away a large portion of the city’s tax base.
As to any new government program bailing us out of the last failed government program, I will refer to Will Rogers, “If stupidity got us into this mess then why can’t it get us out?”
Government hasn’t paid their bills in years, they are broke, why isn’t someone foreclosing on them? Uh-oh, them is us.
Seems a lot like a bailout on the city level, especially since I imagine these are tax dollars at work.
I understand the logic, but it seems flawed if the time is not right to prop up these loser homes.
What good is trying to get these houses sold at today’s price, if it won’t be worth that much the next time the new homeowner goes through foreclosure when something happens and they have no equity to hold on to?
Kinda torn..
MG-
I have to ask myself, “Why aren’t these houses selling?”
If it was just a matter of no one wants a home in poor condition, then there would be a certain logic to what they are doing.
If it’s a case off “Too much inventory, not enough buyers” I don’t see how buying them, fixing them, then pricing them lower and competing against regular sellers will help anything.
The City of Dayton has a “nuisance property” policy where they bulldoze unwanted homes. THAT makes more sense to me.
Or it could be just another way to get some free “gubmint money,” increase bureaucracy, funnel the money to some of the city leaders’ buddies and cronies, get some kickbacks for the people in charge of the checkbook, and sell it with the well worn and proven, “If it helps just ONE child…” line of non-sense.
But then if I thought that, I would be questioning the nobility and altruism of the local leaders.
My bad. It’s probably all being done from pure benevolence and I’d be proud to pour a bunch of my tax dollars into the plan!
Oh, and if the cities have any trouble moving the “flips” they could always offer some tax payer funded no down, no doc, no principal loans.
(Perhaps the great Orange One could help orchestrate as part of a “community service” arrangement.)
Oh Boy !!!
Can’t wait to see their faces when they get a taste of what the banks are dealing with. Stolen appliances, breaks-ins with vagrants nightly, vandalism and tagging, stolen plumbing and wire, crooked vendors, lawn service and utility fees/up keep. Did i forget anything?…. Oooh and they need to fine themselves several $100’s each inspection if anybody throws trash on the property not picked up in 24hrs. Or put the house on a Fast Track Demo list if vagrants break in. Don’t forget the $30,000 for EPA clean up if a bucket of heatin oil hits the basement floor. GOOD LUCK CITY OPTOMISTS. May you live to see your own policies at work.
Linenoise -
You’re not fining people out of existence when they run into trouble – you’re fining people out of existence when they don’t maintain their property. Which, if you ask me, sounds like a good idea. Or do you think it’s hunky dory to live next to three foot weeds, a green swimming pool and broken windows?
Also, they would sell it at auction, which presumably would be greater than refurb cost (I misspoke earlier). If that’s less than the current wishing prices, too bad – it’s the current market price. There’s no reason why that should “drive other owners out of their homes” as you claim – they already bought their homes. If they need to refinance to keep their homes, then they’ve already lost them, they just don’t know it yet.
We’ve got two bad choices – live on a street with abandoned homes, worth almost nothing, or live on a street with inexpensive, well maintained homes. There’s no third choice – you seem to imply there is. If you have one, let’s hear it.