Housing Leadership

Bloomberg Businessweek reported in their February 6th to 12^th issue that three investment groups are seeking to buy more than $2.5 billion worth of foreclosed property. Their intention is to acquire the homes at below market cost, rehab them for health and safety purposes, and then rent them on the open market. They project quick investment profitability while removing empty housing stock from a market glutted with unused inventory. Eyes are on this investment experiment. Will it catch on? Will it have a measurable impact on housing market prices?

Time will tell the story. It is reported that by 2016 homes worth over $1 trillion will be liquidated via foreclosures. That covers an estimated 7.5 million homes. (Morgan Stanley analyst Oliver Chang report.) This surge of homes will be added to the existing home rental market of 20 million properties. Investment groups hope to buy these properties in bulk from Fannie Mae and Freddie Mac and banks.

These developments picture the open market doing its job. But a few questions arise:

First, how are these rentals to be managed? Will they be in groups, by regions, communities, market niches, or target people in financial need? Will the management template be efficient in its task? Can it be with scattered properties?

Second, what effect on local communities will such programs present? Will neighborhood esthetics be respected? Will populations in need such as elder and single parent households, be served or sidelined? Will local authorities have any say in the program? And third, who pays for the losses on these purchased properties? The US taxpayer? The housing industry? The banking and investment industry?

In short, we have too many properties on the market, thus the decline in market values. However, we also have a household income picture which does not allow the broader market affordability to purchase or lease available housing. Until household incomes improve, housing affordability will continue to plague this key market in the American economic scheme.

Jobs creation and careful community planning will help restore the housing market in the long run. Will the short run investments outlined above accomplish much in the meanwhile?

The economy works in conjunction with many markets, conflicting market forces, private and public investment and just plain luck. How can we help it along? Is there room for public/private collaboration that will boost chances for success?

I suspect there are many people pondering the same questions. The pondering needs to be joined and pondered some more. This is called collaboration and it is a useful method to discover new ways of being effective on a national basis. It doesn’t hurt on the local scene either! It takes faith and goodwill to proceed in this direction. It also takes leadership and selflessness. Can we expect this possibility to take root and serve our needs?

Time will tell. There are those, however, who will bleat negative messages and fears and threats. They don’t know of course; they just fear. And that fear holds them and us back from trying new things when such is needed. Can we listen to our inner hopes and dreams for awhile rather than the voices of doom? Can we?

Calling all leaders. In many industries and professions. Many are ready to serve. Who’s doing the calling? You?

February 23, 2012