Vacant homes do not stimulate the economy........and their "ungy"
I am optimistic about all that the government and banks are doing to try and make homes and loans affordable, and make short selling a property easier for a homeowner who has no other sensible alternative.
As we all know, homes that sit vacant over time, on the simplest level, are just not attractive (or as my little neice would say, they're "ungy")
But not only are they an eye sore and a cause for depression within the neighborhoods that they are in, more importantly they do not help stimulate the economy, which is really needed right now.
A homeowner living in a home who is paying their mortgage are contributing in many ways:
- They are paying interest to the banks, who in turn invest their money in the national markets
- They are consuming goods for the home - personal property, appliances, furniture, cleaning supplies, plants, electronics, etc - and by doing this they are helping to keep the employees of all those companies employed.
- They are paying for utilities - helping keep that sector of the economy going and keeping those workers employed.
- They are homeowners, so not only did they provide a transaction for 2 real estate agents, a loan officer, an escrow officer, title officer, etc., but they will most likely need to either upgrade or relocate, which will require a transaction all over again. This also keeps those professionals in the real estate business going.
- And very importantly, especially here in California, a homeowner pays property taxes. This is a huge source of revenue for the state and local government to be able to fund programs and public works projects
When you help your client short sale their property to avoid a foreclosure, or when you assist your buyers in purchasing that REO, you are actually doing your local and national economy a huge favor.
So it is vitally important that we do whatever we can as a society to keep the home ownership principal available to everyone.
Any empty house means empty pockets to many people.
Ralph, I believe you said it all.
I have mentioned this before in a post. Beware of the vacant home next to you. Or even the soon-to-be vacant home. There are many variables in the mix. If the electricity has been turned off and the gas hasn't......even the bank may not know what is happening. And, thieves had some radar connected to copper tubing....I'm not sure how that works. But, I've seen it dozens of times in upscale neighborhoods who have become ghost towns.
Great post Ralph!
I like this post. The message is that we should take care of out neighborhoods and keep working to improve. Bad times will pass.
Ralph - I agree with you. I think, it is better someone occupy any property than keep it vacant. Excellent blog.
Hi Ralph... Funny thing is that I was just making this same point to another agent in my office yesterday! Thanks for backing me up! :)
So, the point is, why aren't the bank working with people to keep them in their home!!!
As an ex-mortgage underwriter, it used to make me sad that I would have to decline a refinance on a property where the homeowners PROVED they could make the higher payment and now, didn't qualify for a refinance. Now, unless they're delinquent and ruining their credit, the banks won't consider a short sale or a loan modification. Stupid "rules" then, stupid "rules" now.
I agree with Juli - and don't share your confidence. Your common sense observation, is not the reality. It might have been if we had broken up the monster banks early on and encouraged smaller, more adaptable regional banks to thrive. But alas that is not what happened. Yes this time will pass, but hundreds of thousands of people will never recover from the losses incurred.
It's so true, one house on your street that becomes banked owned certainly can bring an eye sore to your neighborhood quickly. In certain neighborhoods of L.A. they get tagged with graffiti and I have even seen many of them tagged inside the home. Its really a shame.
Ugly, ugly, ugly...and kind of scary too... I walk in with much trepidation-- afraid of what I will find! Congrats on the feature my friend... good job! Kathy
Ungy - I like that. I was in an REO earlier today that was definitely ungy.
It is important to keep the homes occupied.
Ralph,
Have you thought about sending this to the bank CEO's?
Ralph,
Before you reject that suggestion out of hand, try it. It only takes one to get the ball rollong.
Houston made number 3 in the Forbes list of best places to buy a home. I believe that one of the things that helps to drive the economy in Texas is that we have no state income tax. Taxes kill business and that includes real estate. Texas has a very friendly environment for families and business, and we never experienced "the bubble" here. Our home prices were not inflated by the type of influences that affected other parts of the country.
Having said that, the business model used in the 1980s to get the foreclosures sold worked. We sold them fast and got them off the books. A lot of work but money saved in hiring rehab workers and getting them sold.
Ralph....vacant homes do nothing positive for the economy or the neighborhood they are in.....great post.
Ralph, I agree with your contention about vacant houses, of course....but there is a solution for the your "ungy" house in a 203(k) loan....it is totally under utilized and most agents and home owners/consumers have no clue how it works and the expanse of the program. Ironically, I am in the midst of writing a series on it. There are solutions to some of our market woes if we but find them. Thanks for the opportunity to reblog!
Ralph,
My, you hit this one right on. I nver looked at it that quite in debth. I am going to re-blog and maybe one or more will take heed.
Ralph, this is a wonderful post, you have nailed this one. Empty homes are ungy, they cause many problems and some will never be sold, or will have to be torn down. There has to be a better way.
Ralph - Vacant homes are definitely causing multiple problems.
I was recently showing properties in a neighborhood that was always pristine, lawns manicured, etc. It was evident that many homes were now vacant with overgrown lawns and unkept. The buyers who originally thought this was one of the top neighborhood picks, completely marked it off of their list.
Thanks for an excellent post to reblog.
And when neighbors pitch in...as they sometimes do...to see that the grass, weeds are kept down...or the walk shoveled...it warms the heart of every realtor...
Yessir! And now let's stimulate some more by not ripping out the heart of the working middle class with destorying the MID (mortgage interest deduction), or throwing out the charitable donation exemption!
Ralph:
I am glad you are optimistic about the government's efforts in this area. I wish I could say the same. The rumblings that are coming out of Washington right now about making home ownership less of a priority are causing some concern. I don't think they are moving very quickly to clean up these vacant and foreclosed homes which are bringing down the value of so many neighborhoods.
And, you are right - they are ugly.
Ralph, I think we all saw what all of that special financing to make homes affordable did to the housing market. Do we want to go back to that? Haven't we learned?
What will make housing more affordable is lower prices. Prices that will allow people to actually eventually pay off the mortgage and own it free and clear. When we get back to prices where the average person could afford to put 20% down and have their mortgage payments be about 30% of their income on mortgages that are not backed by any government entity, then we will have a sustainable housing market.
We need the banks to get those vacant homes on the market and sell them for what they can get. Why aren't banks selling those vacant houses? It's prbably because of the accounting rules that allow them to keep them on the books at the original price. If banks were required to face reality and account for actual current prices, ie mark to market, they would all be recognized as bankrupt. So instead, they are biding time trying to take advantage of the free government money to make money in the stock market before the day of reckoning comes. And the day of reckoning will come.
Ralph, looking at it from your perspective makes sense. Everyone wins. Thanks.
I am currently do two Fannie Mae backed HAFA shortsales and they are moving at warp speed. ONe through Chase had a negotiator assigned in three days and a completed BPO three days later. The closing time will be 45 to 60 days. I think we all need to realize how big this problems was and is, and the govenment and lenders have ben playing catch up since 2007.
Ralph...too true dear boy.....The cities in my neck of the woods have zero tolerance on the subject matter and will fine "the vacant house" if not kept up. I saw one home just posted with notice after notice $$$$ and I knew that New York" lender was going to get an education in foreclosing 101....get an agent on-board and keep your property up.......thank you Ralph for this thought provoker.....post
amen brother
let's go out there and do our jobs and stimulate this economy
I think you're spot on, Ralph.
Houses also seem to be happiest when they're lived in. When a homeowner gives them TLC. When there is laughter in the home.
A vacant home doesn't help anyone, including the community.
Thank you for the optimistic persepective. The more optimism that's put out there the sooner/better this recovery will manifest.
Ralph, thats a definate on all accounts. Especially for a neighborhood to keep the cash flow of HOA money coming in.
Helping buyers and seller with foreclosures and short sales is a big WIN-WIN for everyone involved. Thanks for the great post.
Ralph, great post. We all need to do more to help sellers in foreclosure liquidate their properties, avoid foreclosure and fill all the vacant homes out there. Thanks again for your post.
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Ralph - A very poignant post indeed... you should forward this to BOA ... maybe get the ball rolling on some of these blights to the neighborhood...
A consultation with a Stager would help as well. I realize there isn't a lot of cash floating around, but Staging pays off! It's not the extravagance that some Realtors and home owners think it is. Staging before getting an appraisal pays off, too.
Thanks Ralph,
This is a very important subject. I have a client that has been trying to do a loan modification with Chase for over a year now. They keep establishing a sale date and then removing it as he does remit the paperwork that they ask for. It has just been a very stressful thing for my client and he is trying so hard to get Chase to lower his interest rate.
Why not keep him in his home that he maintains extremely well instead of having it vacant and in essence costing the bank more money then if the owner would continue on with a lower interest rate.
Thanks - thanks for an excellent post and sharing with us on Active Rain...great job.
I showed a foreclosure to an investor recently - floors covered with beer cans and garbage, holes smashed in the walls, appliances ripped out, commodes smashed.
It has been the hangout for the neighborhood punks all summer.
And this was in a fairly upscale neighborhood.
What is Deutsche Bank thinking?
Vacant homes just ruin a neighborhood. Vacant homes attract the wrong people to the neighborhood. We fix and flip homes with investors here in Phoenix. WE refurbish the home to market value. The goal is to sell it to a primary home buyer to stabilize that particular nieghborhood. Neighbors thank us all the time.
Vacant homes just ruin a neighborhood. Vacant homes attract the wrong people to the neighborhood. We fix and flip homes with investors here in Phoenix. WE refurbish the home to market value. The goal is to sell it to a primary home buyer to stabilize that particular nieghborhood. Neighbors thank us all the time.
TERRIFIC post and so very true!
We have a section of NW Indiana that has struggled significantly over the years - well before this current economic plite - but there are so many more vacant properties today than ever before. The neighborhood is even more significantly impacted today than yester-year further diminishing the local economics.
Again, terrific post!
Interesting post... Precisely why I was advocating pushing a better solution for short sales as far back as 2007 before all of the other wasted programs that only dragged on the invevitable... created plenty of "ungy" homes that distressed neighborhoods even more and kept everybody you mention from getting paid in a timely manner.
Makes you wonder where we would be if we would have put the horse in front of the carriage...
Yesterday, I showed houses, 3 out of 4, were vacant. They were all priced well for their respective neighborhoods but they were all in need of lots of repairs. It's going to take a long time for these to sell.
Grat point. IF anything people should be moitivated by the banks them selves
Preach it Ralph, they need a family in them to be a home...
It's even worse when the home is cookie cutter in a cookie cutter subdivision. Or milk toast plain...
I am so impressed what Realtors do to stimulate the economy. We have a major hand in what happens, and our RPAC dollars are extremely important to get our points across. What we do and sell, stimulates the economy in so many ways. That would and could be a blog in itself.