Friday, April 17, 2009

Tear Down This Home?

Via Calculated Risk reporting from CNN, a report on a new national strategy to deal with real estate overcapacity: knock it down:

From CNN: Experts: Some foreclosed homes too damaged to sell

"About a third of all of the foreclosed properties nationwide have been so damaged, either by the previous owners or by criminal gangs coming in after the foreclosure, that they no longer qualify for standard mortgage financing," [researcher] Thomas Popik told CNN. "So there is going to be all kinds of government programs to help, but if they don't qualify for standard mortgage financing, there's no one to buy these properties."

Popik says responses from thousands of real estate agents nationwide to the questionnaires he sends out quarterly indicate that badly damaged foreclosed homes ... are a much bigger element of the national housing picture than officials in Washington have acknowledged.

"In many cases, it costs so much to rehabilitate these houses, it's just not cost-effective," he told CNN. "And the properties are eventually going to be bulldozed."

DoctoRx here. This is a national disgrace. Both a Democratic Congress in power since the real estate implosion began and Presidents Bush and Obama bear moral blame. People were sold or "sold" homes to benefit the finance and construction industries, then kicked out of their homes. The homes are now going to be knocked down, thus reducing excess inventory that competes with builders who want to build new homes. This recalls the worst of the Depression-era programs, later found to be illegal, in which for example millions of piglets were killed and crops were plowed under to inflate prices that made farmers and financiers unhappy (rather than give away to the millions of desperately poor Americans (or foreigners) these foodstuffs).

And the lack of specific attention by the Party and a President that postures as the friend of the common man to the shantytowns growing all over this country is a further shame. For moral and pure political reasons, they should be all over this one. Instead they are reworking the President's budget proposal which reserves $750 B for Big Finance and ? nothing for the newly homeless/newly jobless. As stated here almost endlessly, this reprises the failed Hoover trickle-down theory. It was ineffective though not necessarily illogical then. Given our current knowledge of its prior failure, it is completely unacceptable now.

As F. Scott Fitzgerald wrote in The Great Gatsby, which presaged the Roaring 20s and the fallout from the party that never ended till, suddenly, it was no more, we are being borne back ceaselessly into the past; another long national nightmare which we thought we would never see again: deflation and depression. Let us hope this one is not "Great".

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