Sunday, October 16, 2011

HUD: destroy foreclosures or rent them?

Disturbing good-news/bad-news interview in an online edition of the San Diego Union-Tribune:

HUD Assistant Secretary Mary J. Miller says this in a prepared statement for a conference:
"We think there is an opportunity to address the backlog of unsold homes by creating a process for moving real estate owned by the government to new private owners, with a particular interest in creating rental options, as we see more demand right now for home rentals than home sales."
Sounds good, right? But then she tells reporter Lily Leung that sometimes it might be better to tear places down:
"Demolition in some cases may be better for the neighborhood, such as when an abandoned house is known to be a crack house or hangout for gangs. So this strategy may be helpful for really distressed neighborhoods."
So, yeah, you're thinking, if it's a crack house, I can see it, who'd rent a badly contaminated place anyway, especially if it's falling apart, if it's cheaply built to begin with, if there's mold...

But, no, there seems to be free-market ideology at work, not just practical triage, and it means very possibly selling places off or tearing them down rather than rent them to people who need housing:
"I would prefer the government not be landlords as they would be deep-pocket landlords and not always tolerant of tenants needs. For example, the government might enforce a two-person rule in a one-bedroom and studio/den apartment and not let a three-generation family (three people) since this violates some government building code occupancy rule. But the private market would tolerate it as long as they paid the rent. So the point is that the private market is likely to spend less on the housing but do more to help people get into housing faster and with less hassle.

HUD is an agency not known for much efficiency, and even with a younger more dynamic leader in place, we should not start trusting that government can be a successful landlord now. Demolition of units or selling them into the private market as quickly as possible would be best. Then HUD might look to see if they can reduce their own staffing and save some tax payer money by shrinking themselves."
So a high HUD official is afraid of the economic effect of her own agency's standards? So she'd rather tear a place down than open it up to get someone indoors?

What kind of sense does this make?

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