Federal Reserve's Ben Bernanke cites rental management as the logistical issue that if addressed, would be the best way to pull America out of the foreclosure housing slump.
According to the Federal Reserve Chariman, Ben Bernake, the solution to the nationwide housing crisis is to rent homes that have been foreclosed upon. There is a hot market for rental units, much more than sales. With banks hesitating on lending mortgages, this adds to the commonality for potential owners turning to renting rather than buying. Jorge Newbery, director of American Homeowner Preservation mentions, “If you can rent to the former owner, and give them the chance to buy back the home at some later date, then you’re going to have an ally in caring for the property. Their interests as the potential owner, and your interests as the investor, are aligned so you end up with a much more efficient system.” Of course many homeowners will simply want to move on and the government thinks turning these vacant foreclosures into rentals is the way to go. We here at Victory completely agree. In fact, rather than fueling this apartment construction bubble we feel that programs should be aggressively pursued that focus on existing inventory. While rents are certainly not ballooning, most builders these days tend to think they will or are and are undertaking apartment building projects as quickly as possible. For those considering renting their own home, or looking to a Fed White Paper study showing the benefits of turning foreclosed homes into rentals, this is the biggest enemy right now. Once again while the easy money policy of the fed has certainly helped to fuel the recent recovery in the job market and housing to a very small degree this apartment building boom is also a direct result, and ironically negates Ben Bernanke’s great idea for renting these vacant properties. It’ll be interesting to see how this plays out but the bottom line is that rentals, and rental rates are the #1 way to shake out this massive housing glut. We also have serious concerns for Bernanke’s assertion that massive organizations are the best way to handle this issue. These tend to be the same people fueling the apartment bubble. They are sloppy, slow, and out of touch. That would effectively take control away from small local companies like Victory and hand it over to organizations similar to those that pump out foreclosure listings like a 24 hour factory. Have you ever dealt with a Fannie / Freddie attorney or real estate agent? They couldn’t care less about anything other than volume and avoiding all liability. This program must be a local initiative with support from the Fed, not a Fed program or government run in any way. http://www.housingfinance.com/news/aft/020212-aft-Feds-REO-to-Rental-Experiment-Begins.htm