Wife and I were debating tonite and I had an idea that admittedly has quite a few bugs to work out.
We live in a Midwestern city, middle class neighborhood that has quite a few foreclosed homes, maybe 3 per block. I’ve been trying to brainstorm on how to get people into these homes.
It’s another big gov’t program, but I can’t quite make it all work. I’m envisioning a cash for clunkers program, but for houses. I’d like to encourage home owners (or landlords) with 100 year old falling apart "clunker’ homes to leave their homes and take over a foreclosed property. Kind of a land swap.
People in the clunker homes get an upgrade in the quality of their home, with no added cost. People in the struggling middle class neighborhood get rid of the foreclosed homes, thereby raising the neighborhood home values. The banks get rid of these empty houses. The gov’t gets land to build schools, solar, wind, or private business (once the economy turns around and investment starts happening again).
The problem my wife brought up (and I think she’s got a good point) is that taking the homeowners out of the lower class neighborhoods, you are really going to create worse situations for the people who stay behind. She also said that the program would never be able to completely clear out the blocks necessary to allow for the subsequent investment.
Question, can my idea work, even if it needs to be overhauled or if the idea can’t be salvaged, what can be done about these vacant houses that are killing any chance at recovery in the housing market, now that the lenders are not giving away free money any longer?
I’m not sure I’m understanding this. Does the govt. buy a mess of foreclosed homes from banks (at what price?) then offer these to owners of old buildings? Said owners can then trade old for new(er)? Can you trade a tiny wreck of a house for something grand?
At the minimum, sounds costly. Where does the money come from?
Sorry, I’ll try to be clearer. The govt previously basically gave people money (or tax credits) so they would give up their clunker cars and buy new ones.
I envision the govt buying clunker homes for cash or tax credits, which homeowner gives to the bank as a downpayment on a foreclosed home. Then the homeowner gets a new cheap mortage on their new home.
In C for C the auto version, the govt ended up with scrap metal, in this version they end up w/ usable land. It will be costly, but I think there are benefits.
I’m not really seeing what the problem you’re trying to address is. So there’s some empty houses on your block. So what? Are you worried that it’s bringing down your property values or something? I think your wife is exactly right that any improvement in your neighborhood comes as a result of worsening of poorer neighborhoods.
I’d actually be a lot more comfortable with a program that did the reverse-- one that would bail people out of their mortgages on their overpriced suburban houses on the condition they move in and make repairs/improvements to an older house in an older depressed neighborhood. The real problem with the housing market is oversupply from ridiculous over-building in the suburbs and frankly I’d rather see the government knocking down some of those excess McMansions than taking it out on neighborhoods that actually function like, you know, neighborhoods.
My sense is that in a place like Washington, DC, such a program would incentivize a flight to the suburbs, where people are losing their McMansions. That would suck for all of us that live in the city, since we have the older homes that would then become vacant, and then even if they are upgraded, who would want to buy them?
If people aren’t buying nice foreclosed houses now at comparatively good prices, people aren’t going to buy these renovated houses that were dumped on the market because of this incentive program. And my property values will go down, thank you very much.
I honestly think this would set your neighborhood up for another mass forclosure in about 3-5 years. There may be some people out there who just simply can’t get rid of their clunker, but there are probably also a lot of people who don’t move because they can’t afford even the bank-owned suburban home. Those people will still have to pay a mortgage and property taxes long after their government hand out is spent.