Federal Housing Aid – What does it mean for potential home buyers and sellers?

November 28, 2008 at 9:43 am Leave a comment

As part of the Federal housing aid package approved in July, nine cities across Metro Phoenix are devising a plan on how to use the federal aid money to resurrect the housing market and stimulate the economy. Among the cities awarded with federal aid are Mesa, Avondale, Phoenix, Tolleson, Chandler, Surprise and Glendale. In addition, Tucson and fellow Pima County communities Queen Creek and the City of Maricopa are also included. The cities have until Monday, December 1, to submit the plan.

One of the ways being considered to spend the federal money is to help low income buyers purchase and rehabilitate foreclosed homes. Also, municipalities can buy homes in partnership with non-profit agencies, fix them and then sell them. They can also demolish blighted properties and redevelop the lots. Some of the money can be diverted towards foreclosure counseling to help distressed homeowners work out a loan modification with their lenders.

What do these plans mean to potential home buyers?

If the plans are executed effectively, we could see the beginning of stabilization of home values and nicer-looking neighborhoods. Municipalities could buy foreclosed homes, fix them and sell them for a profit. Unlike lender-owned properties, the municipalities do not have to sell these homes now. They can hold them and sell at a time that they feel is right. I don’t think we will see drastic price reductions as we do with bank-owned homes. Instead, homes will be priced well around the recent comparable listings.

What does this mean for sellers?

If home prices stabilize, the public will have a better perception of the real estate market. Buying and selling will increase. Many homes that were rented out will be for sale. The inventory will increase and hopefully, with the help of home buyers’ loan incentives, the sales of homes will also increase.

At the same time that these plans are under way, an aggressive move to keep distressed homeowners in their homes should take priority in order to contain the number of new foreclosures. Foreclosed homes continue to drive our area’s home values down. The banks don’t care about home values, all they care about is selling these homes, which they see only as liabilities on their balance sheets.

For a recent <em>Arizona Republic
article on this subject, go to:

Entry filed under: Arizona Real Estate, Foreclosures & Short Sales. Tags: , , , .

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