Another Look at Renting Out Foreclosures

• November 30th 2011

by Shilpi Paul

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Back in the middle of the summer, the concept that the government should try to fill foreclosed homes with renters was floated. Yesterday, the Trulia Insights blog looked at the effectiveness of a push by Fannie, Freddie and the FHA to sell government-owned homes to investors who would then fill them with tenants.

Trulia’s Chief Economist Jed Kolko explored the impacts of the policy, analyzing the market for REO homes and determined that while the policy is a small step in a positive direction and would help some distressed neighborhoods, with REO homes clustered in places like Michigan, Georgia, the Southwest, and inland California, most urban centers wouldn’t see too much benefit.

From Kolko:

If you don’t live in a neighborhood with lots of homes that the government can sell or rent, then REO policies wouldn’t do you much good. Renting out these government-owned homes wouldn’t ease pressure on tightening urban rental markets. Renters typically live in bigger, denser cities, which are not where most of the government-owned homes are. In fact the typical location of a government-owned home is in a neighborhood with fewer renters, higher rental vacancies and where homes are more spread out.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/another_look_at_renting_out_foreclosures/4674.