Record 19 Million U.S. Homes Stood Vacant at End of 2008 on Bank Seizures

[Purveyor]

Source: Bloomberg

By Kathleen M. Howley

Feb. 3 (Bloomberg) -- A record 19 million U.S. houses stood empty at the end of 2008 as banks seized homes faster than they could sell them and prices continued to fall.

Vacant homes in the fourth quarter increased by 6.7 percent from the same period a year ago, the U.S. Census Bureau said in a report today. The vacancy rate, the share of empty homes for sale, rose to 2.9 percent in the quarter, the most in data that goes back to 1956.

The worst U.S. housing slump since the Great Depression is deepening as foreclosures drain value from neighboring homes and make it more likely owners will walk away from properties worth less than their mortgages. About a third of owners whose home values drop 20 percent or more below their loan principal will “hand the keys back to the bank,” said Norm Miller, director of real estate programs for the School of Business Administration at the University of San Diego.

“When you’re underwater and prices continue to fall, you tend to walk,” Miller said in an interview. “It’s a downward spiral that’s tough to stop because it feeds on itself. Foreclosures encourage other foreclosures and falling prices discourage buying.”

Read more: http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aKufqJK9j1cY

[Thrill]

1. Banks are stupid. Why not just let people stay for half the rent?

Thats better than getting nothing

[Tyrone Slothrop]

2. If that was the policy, who in their right minds would keep paying their mortgage/rent?

If I thought that I could stop paying rent and my landlord would agree to accept half, I sure as hell wouldn't have given her all that rent money on Sunday.

[nichomachus]

4. Banks don't want to be in the rental business

That requires a whole new enterprise for them -- and requires a whole new infrastructure within the bank. Once you start that then you need people to process the rent payments, chase after deadbeats, manage the properties, maintain the properties, etc. That means adding people with expertise in that area, as well as new divisions within the bank. It also created a whole new set of liabilities.

Being property owners and landlords is not within the core competency of most banks. It sounds a lot easier than it is.

At some point, they may decide to do that -- but the problem grew faster than the banks could adjust.

[flvegan]

3. ...and 19 million parcels that banks have to pay property taxes on now.

And condo/HOA fees on each month. And insure. Then there's the lost interest on the money that's no longer on the street in a performing loan.

I could go on and on.

[Gormy Cuss]

6. All of which are good reasons to do something to unload them or try to rent them.

In the eastern part of my county where there's an enormous inventory of bank-owned properties right now they're unloading lots of them for a fraction of the loan value.

[flvegan]

9. The lenders SHOULD be working loans out instead of foreclosing.

Granted, there will always be a percentage of homes that go into foreclosure for various reasons. ARM resets shouldn't be one of them. Neither should late fees and penalties for a missed payment.

[Gormy Cuss]

10. They SHOULD, but they're not. The $64K question is why AREN'T they?

That's what I don't see in this picture -- why so many lenders continue to let properties go to foreclosure rather than try to rework the financing.

[flvegan]

11. Honestly? Because they're idiots.

Turning the mentality of that industry is like bringing about an aircraft carrier.

[Klukie]

7. and that is only if they (banks) don't ignore the property.....

my neighbor across the street from me was foreclosed on back in Nov. The bank has control of the property and failed to maintain the utilities. Well needless to say, without a little heat on during a very bad winter the pipes were bound to break. To make matters worse, the water wasn't shut off at the main and you can guess what happened. All I can say is what a shameful waste. Now some sucker will purchase it at sheriffs sale and have to gut it.

[Life Long Dem]

5. No trickling down for the ones foreclosed on.

100,000 job losses a month. Why not bail out CEO's?

[Democrats_win]

8. Failure of capitalism: people need houses, thousands of houses sitting empty.

There's a famous quote about people needing jobs, jobs that need to be done yet no one hiring people to do the jobs. This is how capitalism fails the people.

[fasttense]

12. That is THE big problem with capitalism

Homeless people while homes sit empty.

People unemployed while jobs need to be done.

Food thrown out while people go hungry.

People without cars while cars pile up in sales lots.

A handful of people accumulate the majority of resources and then waste those resources because they can't use them fast enough.

Just think of the billionaires and millionaires in this country who will waste their wealth. They have so much that they and their family will never be able to spend it all in their lifetime. Yet, millions of people are suffering because they don't have enough wealth to pay for medicine, food, shelter, clothes, water.

[Sin]

13. Here's and example.

My gf and i have been looking for a house for a while saving all the while
when we find one that looks have decent good price nice part of town we all most every time we find one it needs work because it hasn't been lived in for years now and or needed work before but the price they list is ok with the amount of work it needs.

Most recent one we found vacant for 5 + years was a multi family ( split into two apartments but the whole thing is for sale) good size for 54k
needs a lot of work so we call up the Realtor and she tells us that it cant be sold it has to be sold with 2 vacant lots of land that are right beside it bank lumped them together we check the land. with the house and land its nearly its just over 3/4 and acre in town.
Cost on the land 119,000k so the 54k house is now 173k with repairs would be way out of price range.

There's more, the land in question has a big sign on it stating you can buy 1 lot or both ,that was up for about a year now they never took it down and we checked the cama card on it the bank owned those lots for 20+ years they were going to build there branch but then moved into a building down the block about a year ago.

we ask if we can buy one lot nope cant we ask about the sign o nope thats what they wanted to do at first but now no. we ask if we could just pay more for the house nope So basically they just want it to rot in that spot, with the land it's not worth that much.
so now its been like another 6 months and it still wasn't sold if it isn't soon that house will be not even worth it to fix up and will be a total loss, except for the land that its sitting on.