You may have a different favorite, but, for me, the absolute worst idea in this latest iteration of President Obama’s jobs plan is his proposal to have the federal government create construction jobs by funding the rehabbing of empty and foreclosed homes. What’s to like? The housing market tanked in the first place, remember, because one city after another became wildly overbuilt. Why should the government pay to help maintain the glut? Are there no unemployed bulldozer operators the feds can shower money on, instead? Worse, some of the homes President Obama would have the government fix are in neighborhoods that are so far gone that rehabbing them would be pointless. In Cleveland, banks are giving repossessed homes to the city and paying to have them razed.
And in markets that will eventually bounce back, the private sector is already taking care of things, thanks very much-and the federally funded rehab schemes already in place are just bollixing things up. From the South Florida Sun-Sentinel:
The current Neighborhood Stabilization Program has pumped $6.82 billion nationwide to struggling communities hit by high foreclosure rates and with the same basic idea as Project Rebuild: refurbish and resell.
There’s no question families have benefited from the program, which awarded its first grants in 2009. About 15 rehabbed homes in Palm Beach County have new owners or are leased.
But there have been barriers to success. Program administrators say they’ve been undercut by cash investors when trying to buy foreclosures and stymied by banks with tighter lending standards that exclude too many homebuyers. They also have struggled with competition from homes in nicer communities selling for comparatively low prices. [Emph. added]
Close to 70% of home sales in Florida are to investor-buyers, the bulk of whom pay in cash and turn the properties into rentals or refurbish and re-sell them. So there’s no shortage of private capital already on the job. Adding federal dollars to the mix just makes everything more complicated and expensive for everyone. A bigger waste of money I can’t imagine. . . .