February 10, 2008

How to Save the world: Buy Foreclosed Property for Affordable Housing

I came across an article in the San Diego Union Tribune that was very thought provoking. The article discussed some novel ways which cities were brainstorming the problem of foreclosed homes and the blight they create when they sit on the market. How will cities deal with rows and rows of foreclosed homes lowering the value of homes near them and inviting squatters or worse.

One solution being explored by the San Diego City-County Reinvestment Task Force is to create a regional bank. A new agency would be created that would buy up these homes before they became city blight or a speculators dream and instead create affordable housing. The proposal was much more far reaching, but what intrigues me is the use of these homes to solve other growing problems. Heres what they said:

"Form a regional land bank to buy foreclosed properties to create affordable buying opportunities while guarding against neighborhood blight. Purchased homes could be rented at affordable rates and later sold at affordable prices."

Wow! The idea of creating a bank using Government seed capital and private investment capital to buy foreclosed homes and fix them up for lower income people who have been priced out of the home markets in recent years and then sell these homes when the markets return is a total win for everyone. Variations of this such as rent to own for those who would like to get into the market at a later date when homes have reached price equilibrium is another great possibility.

Who Wins

1. The city that maintains vibrant neighborhoods rather that shuttered homes that are a blight, an invitation to crime and a potential health hazard

2. Real estate agents that see less property on the market

3. Rows of foreclosed homes can only lower the value of neighboring homes

4. Affordable housing is a community benefit

5. According to Task force member Robert F. Adelizzi, a retired banker and chair of the subcommittee that rafted the recommendations, this can be both profitable and socially beneficial.

Thanks for Reading
Howard Bell

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