In the rush to a bailout deal, this piece of news fell through the cracks last week, but is worth revisiting:
California and many of its communities hardest hit by the foreclosure crisis stand to receive more than $500 million in federal aid over the next 18 months to buy and fix up distressed homes, the Department of Housing and Urban Development announced Friday.
More, from the Los Angeles Times:
The city of Los Angeles is to receive about $33 million directly from the federal government. In the next few months, the city could also get money from the state, which has a pool of $145 million to allocate to communities. With more than 13,000 foreclosed homes in the city, Los Angeles Councilman Ed Reyes warned that the federal funds would go quickly. Los Angeles County is to receive $17 million, and other cities in the county, such as Long Beach and Lancaster, also would get awards.
In Los Angeles, it's not clear whether this gift from the federal government -- from taxpayers, really -- will be worth the trouble. Foreclosed houses are already selling to private buyers, and they are selling quickly -- roughly 100 foreclosed houses are sold every business day in Los Angeles County. Foreclosures account for one of every three homes sold in L.A. County.
At prevailing prices -- roughly $200,000 to $300,000 for foreclosed homes -- the $33 million in federal funds would buy roughly 130 houses -- the same number of homes that private buyers snap up in a day or two across the county. But the city will have to go to some lengths to buy the homes, or at least it should. It will need to establish a procedure that safeguards against favoritism in picking which houses to buy, and guarantees the city pays no more -- or less -- than market price. The city will also have to come up with a plan to seek bids, hire contractors, and renovate and those homes, and then maintain them while it lists them for sale and sells them. It will be selling into a market dominated by falling prices, which means the city could well lose money on homes the private sector would have happily bought.
What's the point, then, of the city buying the foreclosed houses? Great question.
Web Extra
JJ Swanson is a real estate agent with Coldwell Banker in the Inland Empire, specializing in the Lake Elsinore region. Swanson tells SoCal Connected reporter Lisa Ling and producer Angela Shelley that she’s busier than ever, showing foreclosed properties to clients interested in buying while the market’s down.
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This story made me so sad. I know that everyone has some guilt to bear for this situation, but I can't help to feel sad for the families involved.
P.S. I am so proud of Lisa Ling. I don't know were she would show up next. Hey Lisa would you consider running for president.
If cities receive gov't funds to buy then fix up or repair foreclosed properties, they will create an artificial floor for the falling home prices. Gov't should stay out of it since it was the deregulated established entities which artificially drove prices up with their questionable practices. Let the homes remain as they are whereever they are. Interested private concerns will show up, make inquiries, and make some kind of offer. Why should the taxpayer continue to provide monies to those who got themselves into this mess. I am referring to the Lenders who loaned to those without the means. Why should their bad investments be my problem?
It is outrageous at any time, especially in the current climate, that possessions in the abandoned homes are thrown into landfill. Whatever it takes to recylce these items should be done. Perhaps a notice in local paper each day for needy citizens to come to take things away. I cannot believe that there is not one or more solutions rather than the landfill.
Take a good look. This devastating scene of foreclosures and home abandonments will be repeated on a scale you wouldn't believe if I told you, starting in 2009 and continuing until at least 2020. Home values will drop along the whole of the west coast of North America at 15% a year until they are gone... really GONE!!! (homes under 1400' in elevation).
Now you also realize why Congress didn't want to put $700 billion into supporting banks (a very bad bailout as good money is following bad). But the other (worse) side of this is the mortgages for many of these foreclosed homes have been sold as investments to banks around the world, and so all sorts of other banks are now feeling the losses of their investments (in supposedly 'safe' mortgages) that they thought were as good as gold. Subprime mortgages were part of the problem, but nothing by comparison to these.
The USA will take a hit of many trillions of dollars over the next decade due to the complicity of the greedy (and natural events no one planned for). Other nations will hurt and then dump most investments they have in the USA, because the downturn in the US economy is only just beginning to be realized. The economic downturn will get very much worse.
Save as much as you can in terms of belongings (and dismantle as many buildings/homes too), or get out now and avoid the rush that will soon become apparent. The worst of it will be known by Easter 2009. The worst effects will start by 2012/3.
Many other nations will feel the same effects over the same time period.
Did you listen carefully to the broker at the end? Get in quick, decide now, multiple offers, rah, rah, rah.....
You're looking at one of the culprits of this crisis. She was an integral part of the food chain that led straight to the top - the big banks. She's still at it, albeit now with a different group of clients - the bottom feeders.
The more things change the more they stay the same.
Maggie: Don't sit there idle and upset. Maybe you could go there and make a killing, salvaging and selling all this stuff.
...Keeping in mind that the needy people you would give it to are the ones that left it behind.
Dimmies:
People are multiplying and need a place to live.
No one in their right mind is building right now.
This will shortly lead to an extreme shortage of homes.
Due to the flooding of the market with freshly printed dollars, mega stimulus packages, inflation, you will soon see a real estate boom like you have never seen in your life.
Also, remember you will be paying back your mortgages in extremely inflated dollars.
Thank God there are "bottom feeders," picking up these properties, paying taxes to the community, improving the houses, neighborhood, watering the lawns ,cleaning the pools and stimulating the local economy.
I KNOW HOW PROPLE FEEL WHEN THRY ARE ABOUT TO LOSE THIER HOME. WE ARE IN THAT BOAT NOW,WE ARE BOTH 66 AND IN BAD HEALTH. WE HAVE NO PLACE TO GO WITH OUR THREE LITTLE DOGS.WE LIVE IN VA,AND NO ONE SEEMS TO BE ABLE TO HELP. GOD BLESS ALL OF THRSE THAT ARE IN THIS MESS TO/.I PRAY THAT SOMEONE WILL HELP ALL TO KEEP THIER HOMES.