The foreclosure crisis has had a wide variety of long-lasting effects. In the wake of homeowners losing their homes, the rental market has become flooded with potential renters. The federal government, owner of nearly 250,000 foreclosed homes, is considering renting out those properties to help prop up home prices.
Frannie Mae and Freddie Mac are two of the biggest mortgage lenders in the United States. Since 2008, when the federal government bailed out the two lenders, the Federal Housing Administration has had a stake in the homes owned by these entities. Foreclosed homes often drive down purchase prices in neighborhoods and stay on the market, often vacant, for months or years before selling at a discount.
The heating rental market
Census data indicates that about 3 million households have moved from home-owning to home-renting. Another 3 million households are expected to begin renting in the next four years. Inventory in the rental market is rapidly decreasing. Families are also having a tougher time getting approved for mortgages or choosing to rent rather than take the risk of buying.
Government considering rentals
The Federal Housing Finance Agency has put out a call for ideas on renting out its inventory of foreclosed homes. No plans have been made yet, but the government has several options. One option is to hire a national property management company to rent out and manage foreclosed homes. Another would be to offer homeowners who are foreclosed on the option of renting their own homes from the government. The government may also allow groups of investors to purchase the homes, and those groups would be allowed to manage the homes as they desire. Each individual option has its own drawbacks and benefits, but the government is looking for some way to improve the value and make use of the millions of vacant homes.