Only a bit late, but there is actually something good here – from the Wall Street Journal:
The Obama administration is examining ways to pull foreclosed properties off the market and rent them to help stabilize the housing market, according to people familiar with the matter.
While the plans may not advance beyond the concept phase, they are under serious consideration by senior administration officials because rents are rising even as home prices in many hard-hit markets continue to fall due to high foreclosure levels…
It was on July 27th, 2010 that I provided a revised plan for fixing housing. Here is the central part:
…Essentially, increasing demand is not something we can do in any time frame that will work. And, meanwhile, the longer we go on, the worse it gets.
If you can’t do much with demand, then it is to supply we must turn. How do we lower the supply of houses actually or potentially on the market for sale?
You turn them in to leased houses.
Millions of potential home owners cannot buy homes because they are out of work, have reduced income or have wrecked credit. With all that, they still have to live somewhere, and while some of them are in desperate straights, most of them have some sort of income (and, in a lot of cases, just as much income as they had before they lost their homes). Can’t buy? Rent.
The trouble is that banks don’t want to be land lords. This is understandable, and I wouldn’t ask them to be. But they can put the houses in to corporate structures which do manage rental properties and which can use at least part of the rental income to provide a revenue stream for the banks. We can put a big incentive on this by making the revenue from rental housing tax free for five years. The key is that time frame – though we can go as low as two years: but we want these houses off the market until we have at least a chance of reviving the economy and thus providing a solid base for home demand.
The idea here is to take the massive number of foreclosed homes and lock them away for two to five years – to get out of the housing market the houses which simply don’t have a buyer, and won’t have a buyer for some years to come. But we can’t just let them sit there unoccupied and deteriorating, nor can we expect banks to just sit on things which don’t produce any revenue. We also don’t want to increasingly force the banks in to fire sale prices for the homes they hold as that will just accelerate and make worse the problem we have…
I don’t have hundreds of taxpayer-funded staffers. I’m not some sort of brilliant economist. I’m just this guy who thinks about things and then writes down what he thinks about – I figured this out a year ago (and, actually, longer ago than that – this is a revised plan, some months earlier I had put it out in a slightly different form). It just amazes me how completely incompetent government is. The fact that it is July of 2011 and the housing market has entered a double dip recession before someone in Obamaland starts thinking about this is a sad commentary on the people running the show…they haven’t a clue. But 2012 is coming and that is starting to concentrate some minds over there.
The one thing we can’t afford to do, however, is have Obama actually in charge of the effort. All he’ll wind up doing is ensuring that his cronies get a big payday. We need to really move on this – my plan or something like it. And to do it right it will have to be genuinely transparent, will have to benefit actual people, and should probably be handled by local banks rather than Obama and Bernanke’s buddies in the “too big to fail” entities. And given Reid’s background in corrupt land deals, it would probably be better if he was kept away from it, too. The House should take up the idea, craft it in to legislation and then hand it to Obama – doing it in such a manner that it is such a well-done bill that Obama and Reid daren’t try to modify it.
One thing is certain – if we don’t do something, then housing prices could collapse entirely. And I mean that – like a house worth $125,000.00 today being worth $50,000.00 a couple years from now…and with hundreds of thousands of homes essentially abandoned and deteriorating like Detroit housing. We’re in a housing death spiral – we have to try and stop it; my plan is to take the houses off the market and leave them for the use of the regular, American people. If someone has a better plan, I’m all ears…but we have to do something, and do it quickly.
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