The Times reports that the government is giving Section 8 housing vouchers (covering two thirds of the rent) to move families from some of the worst Oakland, CA neighborhoods to pristine newly built large track homes in San Francisco’s east bay suburbs. The city cited is Antioch in
HUD has issued suburban relocation vouchers for 2.1M renter families, an increase of 50,000 between 2005 and 2007. I don’t want to dwell on the social issues, but the trend from owner-occupied to renter occupied will accelerate until housing prices drop to the level of the mid-1990s. Wages have stagnated and the operating costs of a single family home have risen sharply. Until desperate investors can sell their properties, anything goes. More than ever before, buyers must price in neighborhood risk into their offer price.
From desperate landlords to "Big Time Buying in Foreclosed Single Family Homes," the Post is reporting sovereign wealth funds want to buy single and multi-family bank owned [REO] homes. One unnamed fund is looking to invest $29B. Mortgage consultant Mark Hanson has offered $0.40 on the dollar to IndyMac (IMB) and Washington Mutual (NYSE:WM) for REO in
Multiple sovereign wealth funds, including
This provides a potential silver lining for the almost lost Impac Mortgage (NYSEMKT:IMH), being kept alive by UBS (NYSE:UBS). Impac has started a subsidiary to manage REO for themselves and others. Impac is already providing services to allow tenants to remain in defaulted properties, so that the loan servicer can receive rent. The sovereign wealth funds could provide a great catalyst for growth.
Depending on how they’re managed and how well their properties are maintained, massive rental networks from the sovereign wealth funds can either help, or hurt neighborhoods. My inclination is that it won’t be positive. The worst-case scenario would be that the houses remain vacant while the funds wait for appreciation.
Disclosure: The author is long IMH, UBS and WM.