I have been lucky and so far the recession itself hasn’t hit me personally but I have certainly seen it hit all around me. With two foreclosures in my neighborhood I am reminded everyday of what the current economic situation has meant for many people.
The U.S. Government has tried to stem the tide of foreclosures and break the fall of real estate prices with their First Time Homebuyer Tax Credit. Many people speculate the failure to extend or otherwise expand this credit could result in a secondary fall in real estate prices. I am no economist but I think that is a pretty good bet. In spite of this people still seem to be throwing around the idea that the recession is over and we are on the upswing.
While it may be the case that the recession is over in some areas of the country, many are painfully reminded that it still isn’t over for the areas of the country hit hardest by the recession. A recent article I read over at Yahoo! News shows just how painful it has been for the city of Detroit. The settings was a ballroom where 9,000 abandoned properties were up for sale. According to the article the homes were “in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters.” They further put the properties in perspective:
Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York’s Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.
That is a lot of land up for grabs, the craziest thing about it was the price some of these properties were up for:
Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.
Less than 1/5th. Now they don’t talk much in the article about how many of the homes were actually habitable. What they did say was the habitable homes were snatched up by investors and bankers instead of real people trying to find a place to live. The investor owned properties aren’t going to help the run down areas as much as an occupied home by a proud owner.
A soldier trying to buy a home before heading back out to war summed it up:
Why am I competing against a bank?” he said later. “It would be common sense to have a separate process for people who want to move back to the city or it’s going to stay empty.
The process itself lends to investors being the prime purchasers of these types of properties which leaves a lot of people wondering where the benefit is? I am not a fan of speculators in any market. Look at what oil speculators did to the price of oil not that long ago. Of course homeowners would love it if the real estate market would rise like that, but I don’t see that happening. I think the quickest way to recovery is through the people. The people that built this country are going to be the people responsible for effecting a real recovery.
What are your thoughts on real estate speculators, are they good or bad for these faltering areas of the country?