by Bill McBride on 8/16/2009 10:11:00 AM
Sunday, August 16, 2009
From the Boston Globe: President shifts focus to renting, not owning
The Obama administration, in a major shift on housing policy, is abandoning George W. Bush’s vision of creating an “ownership society’’ and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities.This conversion of housing stock from ownership to rental units is already happening. Based on data from the Census Bureau, there have been over 4.3 million units added to the rental inventory since Q4 2004, far more than the 1.1 million new units completed as 'built for rent' since 2004. (see The Surge in Rental Units)
The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates.
“People who were owners are going to be renting for a while,’’ said Margery Turner, vice president for research for The Urban Institute, a Washington think tank that studies social and economic policy.
“There is a housing stock that is sitting vacant. There is a real opportunity here’’ to use those homes as rental property and solve both problems, she said.
And this conversion is ongoing. According to the Campbell Survey, 29 percent of all existing home properties in Q2 were purchased by investors - probably mostly for use as rentals.
In addition, many of the modification programs are really turning homeowners into renters (or "debtowners"). Most mods just capitalize missed payments and fees, and reduce interest rates for a few years. Many of these "homeowners" will still have negative equity when the interest rate increases again, and this could be viewed as Single Family Public Housing.
The Rentership Society.
Posted by Bill McBride on 8/16/2009 10:11:00 AM