Should We Have a Moratorium on Foreclosures?
We have one side calling for a halt to all foreclosures, while the other side states they should proceed. However, do we know what we are trying to accomplish? Will our efforts result in a desired result?
I am having an internal argument with myself over the state of foreclosures. If you sit down to analyze the theories as to allowing massive amount of foreclosures to happen quickly or slowly, you will find sound reasoning that is meant to help the housing market move forward. You see the real estate market plays a larger factor in our economy than many people may consider, because it is such a common part of our lives. We think of manufacturing or financial investments as economic drivers, but buying a home involves more than the home. Services, appliances, and other goods come into play, so having housing market progress helps the general economy. Although you may not be facing foreclosure, you may have the idea that foreclosures will bring your home’s value down, you might be paying attention to some degree. I do not think that we are fully understanding the implications of these foreclosures, and the election season is not helping matters.
My own desire is to see foreclosures removed from the market, but I admit that my ideas of how this should be handled are a bit fuzzy. I would love to see microparks developed in neighborhoods as centers were community can develop. I would love to see small, local community centers in neighborhoods. I would also love to see neighborhoods that are more sustainable. I would love to see people in homes. You may like these ideas; however, this does mean an expense for the local government to implement them, which is not too popular of a suggestion in our current climate. Have you asked yourself what you would like to see happen with foreclosures? That is a rather specific question. Could we change that to what would you like to see happen with your community? How do we accomplish that change?
There are facts about the housing market that we need to keep in mind. First, recoveries in the housing market take time. Ten years is a standard. I mention this fact, because there is no magic formula that will resolve the problems by next year. Second, real estate is local, except for when it is not. Confused? If we let the foreclosures happen en masse in one state, the housing prices in another state will not automatically drop as a result. Or let me go even more local: if a home in southern part of Houston dropped in value from $200,000 to $150,000, because of the number of foreclosures in that neighborhood, we would not automatically reduce the price of all the homes in Houston by 25%. However, there is a catch. I and other buyers might decide to move into one of these cheaper homes, so the prices in other neighborhoods will come down to be competitive. They will want us to buy there. Nevada may be a place where a company could set up cheaply, because of the amountof foreclosures, which then may effect Texas. Also, large foreclosure numbers can cause financial institutions to react in ways that effect borrowers in other areas. Lastly, people need places to live, and the housing market will find ways to adapt. The American dream has been frequently tied to the idea of a house with a yard. This does not need to be the case though. We may see more people concentrate on condominiums or town homes. We have seen an increase of town homes closer to the city center in Houston, but we may see more town homes in neighborhoods further away. Most current town home designs do not include a yard and they are two stories. There will be developers who see the opportunity to make town homes which fit a family lifestyle.
How should we proceed with these foreclosures? I am not sure that we are possession of all the facts, and I think that we may need to answer legal questions first. Probably foreclosure is the course of action required for many homes, yet there are stories about homeowners that have attempted to pay or have paid, and they still end up in foreclosure. There are agencies which are trying to help homeowners that are do not seem to be getting anywhere with the lenders. We do really need to understand who is being foreclosed upon. We need to understand who really owns the foreclosure, and does the lender have the right to foreclose? If a lender sells a foreclosed property to a new homeowner, does that homeowner really own the property if the lender did not have the right to foreclose? Are the lenders following the letter of the law when going through the foreclosure process? Can we understand the economic ramifications of our actions with any degree of certainty? Meaning, will a drop in home prices in California effect the Midwest in an unacceptable way, or could the Midwest weather such a storm?
I want us to consider a bigger picture. We have the opportunity to evaluate the kind of communities that we want. If local governments become involved, they could use the land recovered by foreclosures for a greater good. If this greater good is the desire of the community, they may find ways for this not to be an expense, or to make the expense acceptable. We could have our communities find ways to make our lives better. Can there be a business located in the middle of a neighborhood rather than along the main streets encompassing the neighborhood? Will this improve our lives? If a neighborhood is suffering from a high rate of foreclosures, would it be acceptable to allow a developer to construct town homes where houses once stood. Would these smaller footprint structures be more desirable? We need to accept that these foreclosures will happen. They will effect the market. We also need to be aware that they can be an opportunity to develop a more stable community, but we need to have the facts clearly spelled out to make an informed decision.
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