The foreclosures across our country are causing problems within neighborhoods. Many areas in the US are experiencing a rise in crime rates due to so many vacant homes. The government has taken both fiscal and monetary action to combat the foreclosure problem with legislation such as H.R. 5830, which has been getting a lot of attention, but it appears to not be enough. Foreclosures are still increasing across the country. In order to turn the foreclosure problem around, we will need the help of those who make money out of other people’s mess. Many real estate agents are already starting to experience making money off of the new foreclosure boom.
The politicians and the feds have taken as much action as they can to help the foreclosure problem; however, they can only go so far. Even though congress has approved H.R. 5830, if passed it would allow for $300 billion to refinance troubled home owners out of their adjustable rate mortgage (i.e. ARM). But this would not be enough to save many home owners who will lose their house to foreclosure. Therefore, we will need market actors to “step in” and buy these foreclosed homes to stabilize neighborhood prices.
How will the act of foreclosure investors stepping into the market ultimately help our country get out of the foreclosure mess?
First, as they are “stepping into a neighborhood” that has had several foreclosures, it will stabilize the prices within the neighborhood. Currently, foreclosures continue to add excess inventory to markets that are already over-stocked with homes to sell. Investors will cause a reduction in inventory that will then bring stability to the market.
Second, it will reduce crime by cleaning up the vacant houses that squatters and drug users like to use.
Next, investors who purchase these homes will provide much needed tax dollars for local governments. Many people forget that local governments borrow money based on projected tax revenues. Because there are so many foreclosed homes, tax revenues are down and some communities are running the risk of falling short on debt obligations. Many smart Realtors already have taken notice to this emerging trend. As one Realtor put it, “Everyone else is suffering, but I’m smiling ear-to-ear…”
Although we may not like the thought of investors benefiting from other’s misfortune, we need the eye sores removed from our neighborhoods. In addition, we cannot depend on government to lend money that will ultimately end up being paid by all of us - the tax payers!
Cliff Pape
Home-Buddies