Foreclosures– Opportunity For Affordable Housing?
Continuing foreclosures in many markets across the country worsen the already critical need for affordable housing according to affordable housing advocates. And, in today’s economic climate, governmental agencies are more concerned with jobs than with housing initiatives.
Meanwhile, that very foreclosure phenomenon offers opportunities for creating affordable housing. As long as this “over-supply” of distressed housing persists, market values will remain depressed and these homes will be available at a discount.
Astute investors will absorb much of this supply and hold the homes as rentals until market values recover, when they may choose to sell. Many of these homes–at least on an interim basis–will contribute to the community’s affordable rental housing inventory. Families displaced by foreclosure will find arguably comparable rental accommodations.
Other investors and dealers may choose to sell immediately. Given the currently depressed market values, such homes will only sell if offered at a discount funded, in part, by the initial purchase. All or part of the discount will be “passed through” to the buyer, resulting in enhanced affordability.
While less likely, some home buyers may bypass the dealer and buy directly from the foreclosing lender. Where this is achieved, the homebuyer may realize even greater affordability.
Aided or not by renewed governmental initiatives, foreclosures offer investors, dealers and potential home owners unprecedented incentives for creating affordable housing. If somewhat anomalous and only temporary, this is a market driven solution to a pressing social problem.
You can explore these issues – and the opportunities they present savvy investors - at the Urban Rehabber Program.
© Philip Elmes. For more about Phil Elmes and the Urban Rehabber coaching program go to: http://www.UrbanRehabber.com