Government Paying Banks to Bulldoze Perfectly Fine HomesChris | InformationLiberation
Aug. 01, 2011
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The government is spending taxpayer's money to help banks get rid of their unwanted homes, only to then have the homes demolished in order to keep housing prices unaffordably high.
From Bulldoze: The New Way To Foreclose in TIME Magazine:
Banks have a new remedy to America's ailing housing market: Bulldozers.This is the equivalent of the cash for clunkers scam, but for homes instead of cars.
The banks do the deals because once the properties are donated they no longer have to pay taxes or for upkeep. Tax experts say the banks may also be able to get a write off for the donation. That appears to be a better deal than trying to repair some of these homes, which according to a BofA spokesperson are more economical to demolish than fix up. The local governments like these deals because they get free land to develop or use for open space. [The land is not "free" if the government is paying them for it. - InfoLib] Cleveland-based Cuyahoga County Land Reuntilization Corp., which inked the deal with BofA, has been one of the most aggressive local government organizations in striking these deals. Housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all, dragging down home prices in general. An oversupply of homes on the market has been once of the big problems plaguing real estate. At the end of June, it would take nine and a half months for the current number of homes on the market to sell. The housing market is considered healthy when supply equals six months of sales. So taking some of these homes off the market for good could remove some of the inventory drag. [Emphasis added]Who are these idiotic "housing economists?" High prices might bode well for home owners, but for those of us who do not own a home and would like for prices to come down, we're getting screwed. The government subsidizing home prices to help the well off at the expense of the poor is not remotely "good."
The question is whether the banks will ever put up enough housing for demolition to make a difference. The Obama administration says it is working on its own plan to revamp its loan modification program in order to help keep more people in foreclosure in their homes, reducing the number of foreclosed properties on the market. Some areas of the country are looking at how to speed up foreclosures in an effort to return some normality to the market. It's not clear that any of this will work. Certainly, the idea that we are at the point where banks would be better off knocking down houses that reselling them shows there is still something very wrong with the housing market. [Maybe the government subsidizing the banks to do just that is contributing to the problem? - InfoLib] But what is clear is that banks and others are at the point where they are ready to try something new to boost the housing market. And that is a good sign for the future.Actually, it's a horrible sign for the future, but it's a perfect sign for why things are so screwed up in the present.