The ongoing foreclosure crisis is causing the Federal Housing Administration to become the owner of an increasing quantity of property around the country. CAP’s Andrew Jakabovic proposes that we seize the opportunity to retrofit them as green rental housing:
How? By pooling these houses by location, renting them out affordably, and then selling them in as a portfolio of already-occupied rental properties to institutional investors. Retrofitting and weatherizing these homes before renting them out provides even more value to taxpayers by reducing operating costs in the form of lower energy bills. Because the value of rental properties is driven by the net cash flow from the properties, demonstrable cost savings on operations increase the portfolio’s value.
In 2009 alone, FHA paid insurance claims and then took title on 75,000 single-family houses. As increasing numbers of foreclosed homes come into the possession of the FHA, the federal government could create long-term affordable rental housing in communities across our nation while minimizing losses to taxpayers who stand behind FHA mortgage payment guarantees. By repairing these foreclosed homes to meet the highest energy efficiency standards and then renting them out, taxpayers may well recover the most value after foreclosure.
The retrofitting would be a good jobs project at a period when the labor market for people in the building trades is terrible. What’s more, a variety of misguided housing policies have left the country lacking the sort of good, deep markets in rental housing that would be beneficial to families that need a place to live and shouldn’t be taking on big loans.