The Housing Market Has Bottomed Out

May 11, 2012 / Russell Legato, Residential Property Analyst

There will be stabilization in the housing market in in the United States as soon as foreclosures are depleted. The prices are extremely low and this is expected to happen soon. There are groups of potential buyers still waiting and hoping for further price decreases. Than is delaying a recovery in the real estate industry. While buyers wait, industry experts think the market has reached the lowest point and can only go up.

The Housing Market Has Bottomed Out

Two government supported entities, Fannie Mae and Freddie Mac are considering selling foreclosed properties to investors in bulk. These investors would then rent them out. To test how this would work out, they will start by selling 2,500 homes now held by Fannie Mae. There are two perceived threats to this plan. No one knows which will prove to be better for society at large.

One scenario will have vacant homes in neighborhoods. They become run-down and a neighborhood can go downhill fast.

The second scenario could involve renting at low rates to less than responsible people, which could prove to be an invitation to drug dealers, hence, blight on another neighborhood.

There are pitfalls in both of those ways of handling the many foreclosures. There is no reason they cannot be rented out for decent rates comparable to other houses in a given neighborhood.

One industry leader, Ranieri, of Ranieri Brothers sees a way to bypass those two scenarios. He doubts whether it will be used as a tactic though. He sees giving tenants a rent-to-own opportunity. If someone feels like a property owner, he or she is likely to act like one. That tenant will take care of the home he or she rents because someday it will be his. He bases these assumptions on experience and the hope that pride of ownership will motivate the renters.

The government is setting up some regulations and, according to Ranieri and William Seidman, the former chairman of the F.D.I.C., who are likely to be good at predicting the future of the housing market. Both expressed the opinion that the next eight months should see a change.

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