In case you haven’t heard, renting is the new buying. With more and more houses being lost to foreclosure, fewer Americans capable of qualifying for new mortgages and many who do may be wary of investing in a new home that might be difficult to sell down the road.
With foreclosure rates staying high, and many of those homes sitting empty, the Obama administration, Fannie Mae and Freddie Mac are reportedly hoping for a different solution. The new program allows management companies to buy large quantities of homes that have been foreclosed upon and rent them out.
In many ways this program mimics multi-family rentals, such as apartments, that are commonly run by large management companies. However, owning several houses poses various differences versus having the same number of homes located in closer proximity of one another.
With the uncertain economy, there are many people who hesitate to put down the firm roots that come with home ownership, but many have not given up their dream of living in a house. Rental contracts under this program may allow more families to be able to raise their families in a house, and give those who have already faced foreclosure the opportunity to continue to live in a house, rather than downsizing into an apartment.
The other hope for the program is that overall, housing prices would begin to stabilize. With fewer homes sitting vacant, home prices could start to creep back up, which is good news for homeowners who long for their own home values to increase as well. Of course, how well the program actually works can only be determined once it has had a chance to be around for a while.
cnbc.com: “White House wants to convert foreclosed houses to rentals,” Diana Olick, Jan. 9. 2012