Wednesday, July 27, 2011

Obama considers becoming slumlord for foreclosed homes

One proposal winning support among some federal officials would sell thousands of foreclosed federal properties to private investors who agree to rent them. Investors would rehab homes, run the leasing process, and contract with national property management firms to handle day-to-day tenant demands.

The housing market has been struck by a troubling phenomenon. As distressed borrowers lose their homes, they must rent. But all those Americans hitting the rental market are causing rent prices to rise. In the meantime, as the population of homeowners shrinks, more houses are hitting the market and prices are declining. The solution here seems obvious: convert all of those foreclosed homes into rental properties. That way, rent and home prices should both stabilize. The government is reportedly considering alternatives to encourage this outcome.

An easier option might just be for the government to provide a simpler incentive to buy distressed properties outright. One thing you could do is to exempt rental income from taxes until the end of 2017 on properties was purchased after, say, August 1, 2011. That would make investing in a rental property even more lucrative and allow the market some time to heal before the investors might want to get out of the landlord business and sell the houses they own. Source: (1) The Atlantic

The real story not be discussed in the mainstream media is the monetization of debt being carried out by the US Treasury and the Feds. There must be a plan, but one has to wonder what it is: do they plan to declare bankruptcy or do they hope to inflate away their debt?

In the ’70s, Nixon basically reneged to the French on paying their debt in gold and the US government proceeded to inflate their debt away. It caused a whole world of pain to everybody and forced the world to cover America’s reckless spending. (more)