Rent Foreclosed Homes

[Will E Worm]

Government Considers Removing Foreclosed Homes, Renting Them Out


unsold properties in today’s real estate market and prevent home values from continuing their downward spiral, the Obama administration is considering pulling foreclosed properties owned by Fannie Mae and Freddie Mac off the market and renting them out[1]. This could, according to Credit Suisse analysts, ultimately help avert another 3-5 percent decline in home prices. Although this move would place the federal government in the somewhat controversial position of landlord to potentially thousands of tenants, the proposal to “trim the glut of unsold foreclosed homes on the market is worth looking at,” according to Federal Reserve chairman Ben Bernanke in testimony to Congress last week[2].

Given that national rent rates are on the rise, it will probably surprise no one that the cash-strapped federal government is considering getting involved in this aspect of real estate. However, another idea rumored to be on the table is that federal officials might sell the foreclosed properties to investors in bulk to rent out. Do you think either of these options will work?

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The Obama administration is examining ways to pull foreclosed properties off the market and rent them to help falsely stabilize the housing market.


If they want to do this they need to sell homes at an affordable price.

 

[Hot Mega]

I would have to think about this more.

My initial thoughts are it's bad policy IMO. The marketplace ought to play the lead role in this.

 

[Rey C.]

If they want to do this they need to sell homes at an affordable price.

I think the rub comes down to what is an "affordable price"? When the market was still in free fall, I remember seeing a foreclosed house on a CNBC special report back in 2009. It was a beautiful, newer home in a subdivision in Arizona. As best I can recall, it was over 3,000 sq.ft., two story, high end finishes... lots of bells & whistles. It was on the market for $90K or so and had been built for over $250K +/-. While to many people it might have been affordable, it wasn't such a great deal (at that time). The CNBC camera panned around to show why: the house across the street was in foreclosure at roughly the same price and there were several more houses down the block that were also in foreclosure in the same price range. I believe something like 25% of the houses in the subdivision were in foreclosure.

Now that people think of their homes as investments, where the appraised value needs to be updated every year or two, it seems like they worry less about whether the house will make a good home for their ****** or is affordable, and more about what they can sell it for at the drop of a hat... like a stock or bond.

I don't know. Pretty complex issue. I guess the idea of selling them in bulk to investors makes as much or more sense than anything else I've heard. That's going to knock prices down too. But at least it'll take some of the backed up inventory off the market and allow the real estate market to begin healing. If the government rented them, I doubt they could be managed all that well (property managers would rob and cheat them blind) and at some point, they'd still need to sell them.

 

[ragincaucasian]

there are a **** ton of foreclosed homes on the market now and this is a buyer's market, especially with the Fannie & Freddie institutions re-vitalized (with a **** ton of incentives to buy from them)

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the flip side to the 'affordable' price angle is that if you bought your house for $250k six years ago, and now your neighbor's houses are selling for $120k now....your community's property value is based off the other houses (sold for price) in the area

 

[Kingfisher]

If they want to do this they need to sell homes at an affordable price.

Completely agree with that statement.