Two problems plague the U.S. housing market: 1) A glut of foreclosed properties is holding home prices down — and that weak housing market is putting a damper on economic growth. 2) Undersupply of rental units is causing rents to increase faster than inflation in places like San Jose, Washington, D.C., Seattle, New York and Houston.
Yesterday, the Obama administration announced plans intended to address both problems at once.
Fannie Mae, Freddie Mac, and the Federal Housing Administration now own some 250,000 foreclosed homes — roughly half of the total number of unsold, repossessed properties out there. There are another 800,000 or so homes in some stage of foreclosure that are backed by the agencies. The administration plan proposes to take those properties off the residential housing market and instead package them for sale in bulk to private investors, who would be required to convert them into rental units.
And conveniently, the move wouldn’t require a vote in Congress.