Housing market experts remain divided over the Obama administration’s proposal yesterday to sell government-owned foreclosed properties and convert them to rentals.
The administration’s suggestion would involve teaming up with private-sector partners, who may be willing to purchase pools of similar properties for conversion, in order to clear the foreclosure backlog and meet increasing demand for rental units. Yesterday’s request for information by the government, was primarily aimed at potential investors, the Journal said.
Solutions that rely on investors to clear the overhang of foreclosures have “extraordinary value,” said David Stevens, chief executive of the Mortgage Bankers Association, who previously served as the commissioner of the Federal Housing Administration. “Without question, in order to settle the markets and move the foreclosed inventory, we’re going to need both owner-occupied and non-owner-occupied solutions. That means investors have to come in to participate.”
Others had different ideas entirely, including Richard Smith, CEO of Realogy, which owns major brokerages the Corcoran Group, Citi Habitats, Century 21 and Coldwell Banker.
“[This] is the stupidest idea I’ve ever heard in my life,” because buyers are paying close to list price on foreclosures, he told the Journal. “The hedge-fund approach to this is a pipe dream. It’s not going to happen. The marketplace would much prefer that these go to small investors who manage them in their own backyard.” [WSJ]