"Due To Housing Crisis, The Government Now Sitting On More Than 50,000 Homes"
Today, USA Today noted one more problematic result of the housing crisis — the federal government is sitting on a lot of homes that nobody really wants to buy:
The combination of a deep recession and a foundering housing market has left the government with more than 50,000 houses on its hands — enough homes to fill a city the size of Riverside, Calif., or Miami. Now federal records show it’s struggling to unload the houses and facing billions of dollars in losses…In many ways, the government’s situation parallels what thousands of other homeowners are confronting: The houses it owns are harder to sell, they typically sit empty longer, and in many cases, their values cratered as the real estate market collapsed.
The government is desperately trying to offload these homes, so much so that the Department of Housing and Urban Development (HUD) lost “39 cents on the dollar for every home it resold last year,” and is set to lose even more this year. This is a pretty big problem that is only going to get worse as the foreclosure rate keeps increasing.
But selling the homes one at a time to individual buyers is not the only way to get them off the government’s hands. One other option is to bundle properties that are in the same general geographic area and sell them to investors to maintain as rentals. This could be a great way to bring much needed rental housing into distressed housing markets. CAP’s Andrew Jakabovics and Ellen Seidman from the New America Foundation go through the possible models to base such a program off of here.
A second option is to strengthen efforts to help communities purchase and rehabilitate foreclosed, vacant properties. These properties could then be sold to low- or moderate-income borrowers, with the understanding that any future profits on the sale of the home will be shared jointly by the homeowner and the public. As David Abromowitz put it:
Beyond the present benefits of economic stimulus, the current sharp home-price plunge is also a unique, once-in-a-generation window to establish a stable stock of long-term, affordable, shared equity housing. Allowing good affordable housing stewards to buy homes in these neighborhoods is responsible policy. The public gets a return on its investment now, and also long beyond the first homeowner is helped.
In any case, it makes no sense for the government to sit on these homes, particularly when you factor in the costs of upkeep. It’s far preferable that the homes get put to some sort of productive use.