The East Bay’s Alameda County is getting into the house-flipping business.
The Oakland Tribune reports County gets $11 million to help neighborhoods
Alameda County will receive $11 million from the federal government in stimulus funding to help combat blight and fix up neighborhoods affected by the country’s housing foreclosure crisis.
The U.S. Department of Housing and Urban Development awarded the county the money under its Neighborhood Stabilization Program.
The county’s Housing and Community Development Department will work with local nonprofit housing agencies to purchase and rehabilitate at least 100 foreclosed, vacant homes and resell or rent them to eligible households.
…
Under the rules of the Neighborhood Stabilization, at least 25 percent of the funds will be used to purchase properties that will be rented to households with annual incomes at or below 50 percent of area median income. The remaining funds will be used to purchase and rehabilitate homes that will be resold to households at or below 120 percent of area median income.
75% of the funds will be used to buy and flip houses…which is supposed to somehow help local neighborhoods. The problem with this logic is that there are plenty of house flippers already. This Government Money is not bringing a new service to the community, but instead it’s going to be competing with existing flippers and investors, pushing prices real estate higher than they would otherwise be.
This, of course, is the problem with all Government programs that are supposed to help make homes affordable: they end up creating more demand, which pushes prices higher.
I wonder what Alameda County does with the profits? Does it re-invest them into the program and flip more houses? Or does the money end up in it’s general fund?
January 16, 2010
The Bigger Picture