$1 Billion for REOs

$446 Million is coming to California and $1 Billion nationally is being awarded from the Department of Housing and Urban Development’s Neighborhood Stabilization Program to buy up REOs (Real Estate Owned, also known as foreclosures.)

The states awarded the most money were the “sand states”: Arizona, California, Florida, and Nevada.  And the “rust belt states”:  Illinois, Indiana, Michigan, and Ohio.

The money will be used to acquire land and property, demolish or rehabilitate abandoned properties, and provide downpayment and closing cost assistance to low-to moderate-income homebuyers, and will be partnered with major banks to speed the transfer of these foreclosed properties.

So… a new incentive!

What we’ve seen so far with San Diego real estate is that without an incentive, the inventory goes up, not aiding sellers in their quest to sell their homes, but lowering prices and bringing out investors that can trump most any first time homebuyer’s offer.

Faced with falling tax revenues and rising expenses, state and local governments are hoping that this program will help with the number of vacant properties they have been battling with in the communities.

This all sounds good.  Now, let’s see how the money is handled. 

If the local leader organizing the money for San Diego and California chooses to spend the money on commercial real estate, the acquisition could eat away much of the money quickly with the prices that we see here in commercial real estate.

It will really be interesting to see how all of this plays out, coupled with the Unemployment Assistance Program, Keep Your Home California, and the Neighborhoood Stabilization Program, when will the real estate market see stabilization and steady appreciation again?

There is a lot offered in this Neighborhood Stabilization Program, if you’d like to know more on how it works, click here.