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View Full Version : A random idea for the housing market


Saul Good
08-04-2011, 03:17 PM
I was reading yet another article today about how abandoned, foreclosed houses are creating a burden on municipalities. These houses fall into disrepair, and they attract crime. I was trying to think of a solution, and the first thing to come to mind was this:

Could we force the banks to sell the houses within a certain amount of time (one year or so, maybe) following the foreclosure? If they fail to do so, the local government is allowed to auction off the property, collect a fee, and give the rest to the banks.

This would generate revenue for the municipality, clean up the neighborhoods a bit, and help ease the housing glut (albeit by dropping home prices way down).

The banks would take a hit, but I'm not worried about banks that created a lot of this mess in the first place.

Thoughts?

Discuss Thrower
08-04-2011, 03:25 PM
Aren't you aware DC is a common sense free zone?

Chocolate Hog
08-04-2011, 03:26 PM
Not surprising this is a horrible idea.

trndobrd
08-04-2011, 04:35 PM
I was reading yet another article today about how abandoned, foreclosed houses are creating a burden on municipalities. These houses fall into disrepair, and they attract crime. I was trying to think of a solution, and the first thing to come to mind was this:

Could we force the banks to sell the houses within a certain amount of time (one year or so, maybe) following the foreclosure? If they fail to do so, the local government is allowed to auction off the property, collect a fee, and give the rest to the banks.

This would generate revenue for the municipality, clean up the neighborhoods a bit, and help ease the housing glut (albeit by dropping home prices way down).

The banks would take a hit, but I'm not worried about banks that created a lot of this mess in the first place.

Thoughts?


I would love to buy a couple properties for $0.04 on the dollar and start my career as a slum lord.

How does forced sale of homes at rock bottom prices ease the housing glut?

orange
08-04-2011, 04:41 PM
Could we force ...

Spoken like a true, small-government, free-market conservative. :hmmm:

Direckshun
08-04-2011, 05:12 PM
Hmmm. Very intriguing idea.

Saul Good
08-05-2011, 08:13 AM
I would love to buy a couple properties for $0.04 on the dollar and start my career as a slum lord.

How does forced sale of homes at rock bottom prices ease the housing glut?

How does decreasing prices increase demand? Is that really your question?

In normal circumstances, homeowners lower the price when homes won't sell. Because home prices are falling so much across the board, sellers aren't able to drop the prices enough because they have to cover their notes. This is creating an artificial price floor which is above the demand price. As a result, nothing moves.

Eventually, prices will reach equilibrium because the banks will sort through their inventories and unload everything. Because the banks are not capable with dealing with such a huge amount of properties being returned to them, this could take several years.

The houses have already lost their value, and thy are only going to lose more value as they deteriorate due to lack of upkeep. Why not just stop delaying the inevitible and start auctioning them off? At least we can start collecting property taxes, discourage theft, and re-gentrify some of the neighborhoods than have become blighted?

Saul Good
08-05-2011, 08:19 AM
Spoken like a true, small-government, free-market conservative. :hmmm:

I know. I know. It makes me sick, but the banks stepped outside the realm of the free-market when they took bailouts. They are now our bitches and should be treated as such.

Wow. It feels good to talk like a lefty every now and then.

jiveturkey
08-05-2011, 08:23 AM
It would punish those of us that have survived this shit storm but lowering our property values even more.

LOCOChief
08-05-2011, 08:24 AM
Could we force the banks to sell the houses within a certain amount of time (one year or so, maybe) following the foreclosure? If they fail to do so, the local government is allowed to auction off the property, collect a fee, and give the rest to the banks.

This would generate revenue for the municipality, clean up the neighborhoods a bit, and help ease the housing glut (albeit by dropping home prices way down).

The banks would take a hit, but I'm not worried about banks that created a lot of this mess in the first place.

Thoughts?

Its fed regulation that prevents banks from selling or dumping distressed REO's on the market.
As far as housing is concerned it really isn't the banks that caused this mess.

It was the "salability standards" established by Fannie / Freddie that Barney Frank and Chris Dodd said not to question back in 2004 I believe.

They gave consumers the rope to hang themselves with.

Your idea could work, but you don't want local community banks shouldering this because they didn't create it. The current administration is trying to kill the local banker and back his dog in the hunt which is any institution that took TARP. Just like GM.

Saul Good
08-05-2011, 08:41 AM
It would punish those of us that have survived this shit storm but lowering our property values even more.

I don't think it would lower property values. The damage has already been done. This is just acknowledging it. A vacant house that falls into disrepair and eventually sells for squat is going to lower property values more than auctioning a house before it falls into disrepair.

Saul Good
08-05-2011, 08:47 AM
Its fed regulation that prevents banks from selling or dumping distressed REO's on the market.
As far as housing is concerned it really isn't the banks that caused this mess.

It was the "salability standards" established by Fannie / Freddie that Barney Frank and Chris Dodd said not to question back in 2004 I believe.

They gave consumers the rope to hang themselves with.

Your idea could work, but you don't want local community banks shouldering this because they didn't create it. The current administration is trying to kill the local banker and back his dog in the hunt which is any institution that took TARP. Just like GM.

I don't disagree with any of this other than the implication that the local banks would be harmed. They don't hold so many properties that they are unable to manage them. A year should be. Ample time for them to determine what needs to be done.

LOCOChief
08-05-2011, 08:49 AM
QUOTE=Saul Good;7803105]I don't think it would lower property values. The damage has already been done. This is just acknowledging it. A vacant house that falls into disrepair and eventually sells for squat is going to lower property values more than auctioning a house before it falls into disrepair.[/QUOTE]

I think that you are right in that before the collateral becomes more dilapidated get rid of it.

But who should absorb the deficiencies? In the end it can only be the tax payer.

LOCOChief
08-05-2011, 08:53 AM
I don't disagree with any of this other than the implication that the local banks would be harmed. They don't hold so many properties that they are unable to manage them. A year should be. Ample time for them to determine what needs to be done.

Well you're wrong, we hold enough to break our collective backs which is what Obama wants.

That's why they continue to increase loan loss provisions and capitol requirements on us more than their big bank partners.

Saul Good
08-05-2011, 09:25 AM
QUOTE=Saul Good;7803105]I don't think it would lower property values. The damage has already been done. This is just acknowledging it. A vacant house that falls into disrepair and eventually sells for squat is going to lower property values more than auctioning a house before it falls into disrepair.

I think that you are right in that before the collateral becomes more dilapidated get rid of it.

But who should absorb the deficiencies? In the end it can only be the tax payer.[/QUOTE]

IMO, this wouldn't cause deficiencies. They already exist. This would simply be recognizing what has already become a reality. These houses are worth what they are worth. With every day they sit unoccupied, that value decreases. Sitting on them isn't really in anyone's best interests. Maybe this would encourage lenders to be more willing to restructure loans before they foreclose.

There are basically 2 premises from which I am starting:


1. The housing market can not recover until prices reach equilibrium.
2. Empty houses are bad for everyone (except criminals).

ChiefsCountry
08-05-2011, 09:28 AM
As a real estate agent this is a horrible idea. The biggest problem with foreclosures are the banks themselves. They are the ones who have fucked up to begin with for the most part. Alot of the houses on the foreclosure market are there bc of the bank's stupidity in giving the loan. Not based on the people's income to pay off the loan but on the properties themselves. Lot of stupid ass ideas that never should have been given in the first place. Then when you try to sell a foreclosed home, its an even bigger cluster fuck. And of course Freddy Mac and Fannie Mae homes are even bigger pain in the asses.

Dave Lane
08-05-2011, 09:31 AM
I was reading yet another article today about how abandoned, foreclosed houses are creating a burden on municipalities. These houses fall into disrepair, and they attract crime. I was trying to think of a solution, and the first thing to come to mind was this:

Could we force the banks to sell the houses within a certain amount of time (one year or so, maybe) following the foreclosure? If they fail to do so, the local government is allowed to auction off the property, collect a fee, and give the rest to the banks.

This would generate revenue for the municipality, clean up the neighborhoods a bit, and help ease the housing glut (albeit by dropping home prices way down).

The banks would take a hit, but I'm not worried about banks that created a lot of this mess in the first place.

Thoughts?

The banks are desperate to sell these off its just that in most cases there are no buyers.

Brock
08-05-2011, 09:32 AM
The banks are desperate to sell these off its just that in most cases there are no buyers.

Then their prices must be too high.

Saul Good
08-05-2011, 09:32 AM
As a real estate agent this is a horrible idea. The biggest problem with foreclosures are the banks themselves. They are the ones who have ****ed up to begin with for the most part. Alot of the houses on the foreclosure market are there bc of the bank's stupidity in giving the loan. Not based on the people's income to pay off the loan but on the properties themselves. Lot of stupid ass ideas that never should have been given in the first place. Then when you try to sell a foreclosed home, its an even bigger cluster ****. And of course Freddy Mac and Fannie Mae homes are even bigger pain in the asses.

I don't follow. These would be bank-owned houses. This would force the banks to either clean up these messes in a timely manner or have it done for them with a charge associated.

Saul Good
08-05-2011, 09:38 AM
The banks are desperate to sell these off its just that in most cases there are no buyers.

If I can't sell a $20 bill for $50, that doesn't mean that nobody wants a $20 bill.

King_Chief_Fan
08-05-2011, 11:09 AM
As a real estate agent this is a horrible idea. The biggest problem with foreclosures are the banks themselves. They are the ones who have ****ed up to begin with for the most part. Alot of the houses on the foreclosure market are there bc of the bank's stupidity in giving the loan. Not based on the people's income to pay off the loan but on the properties themselves. Lot of stupid ass ideas that never should have been given in the first place. Then when you try to sell a foreclosed home, its an even bigger cluster ****. And of course Freddy Mac and Fannie Mae homes are even bigger pain in the asses.

not a rebuttal to your comments or the original post....curiosity about how the real estate is doing in the ozark lakes area

Taco John
08-05-2011, 11:11 AM
This is an awful idea that would demolish the value of homes wherever it was done.

ChiefsCountry
08-05-2011, 11:12 AM
not a rebuttal to your comments or the original post....curiosity about how the real estate is doing in the ozark lakes area

On the water sales are decent - July was actually a pretty good month, off the water horrible.

Saul Good
08-05-2011, 11:14 AM
This is an awful idea that would demolish the value of homes wherever it was done.

How so?

Taco John
08-05-2011, 11:15 AM
I don't follow. These would be bank-owned houses. This would force the banks to either clean up these messes in a timely manner or have it done for them with a charge associated.

Who owns the property? The banks or the government? If the government says "sell these, or we will sell them for you," then the government is saying that they own the property - the banks are just leasing it from them.

Why would anyone buy a home from a bank if they knew the government would undercut their price in a pennies on the dollar auction? Why would anybody buy the guy's house on Maple Street for market value if they knew they could get a similar home on 117th at a fraction of the price?

King_Chief_Fan
08-05-2011, 11:15 AM
On the water sales are decent - July was actually a pretty good month, off the water horrible.

any good buys or have the lakefronts held thier value?

Saul Good
08-05-2011, 11:29 AM
Who owns the property? The banks or the government? If the government says "sell these, or we will sell them for you," then the government is saying that they own the property - the banks are just leasing it from them.

Why would anyone buy a home from a bank if they knew the government would undercut their price in a pennies on the dollar auction? Why would anybody buy the guy's house on Maple Street for market value if they knew they could get a similar home on 117th at a fraction of the price?

There are some flaws in your reasoning here.

1. Houses are auctioned regularly. It doesn't crush neighboring home prices, and they don't go for pennies on the dollar.

2. The banks would get the proceeds, so its not like the government would act as owners. If they can force people to pay property taxes, they can force a sale.

Here's a question, though. Are banks required to pay the taxes after foreclosing?

ChiefsCountry
08-05-2011, 11:32 AM
any good buys or have the lakefronts held thier value?

Lakefront has actually held in value. A few good buys but far and between.