As you know AZREIA stays out of politics. That doesn’t mean we don’t engage legislatively to represent our members – we do. We work a lot behind the scenes. I find it easier to get things done and it keeps you out of potentially negative press articles. So, members rarely hear me comment on political topics. It is when politics crosses over into potential legislation that blurs the distinction.
I have never been a proponent of laws to address what are clearly short term problems mainly because of unintended consequences when the “short term” law is no longer needed. As you know, laws are almost never removed from the books. Much of the proposed legislation to “deal with” or “help homeowners” in foreclosures unfortunately falls into the category of short term need. Once our market returns to normal what happens to all these laws and the burden many of the proposed laws would place on the free market.
Some proposed legislation would actually force investors to do things that just a few years ago were seriously frowned upon by many government agencies. One example of this is to require the investor to rent property back to the previous owner for at least one year. All the reasons it was a problem before the foreclosure crisis just mysteriously vanished with short term changes in the market place. Not to mention that the new owner may not want to be a landlord or the obvious intrusion on private property rights that is the foundation of capitalism and free markets.
There is no question that the foreclosure crisis is real and has impacted a huge number of families in our state. I am sure, like me, you have friends that have been impacted by foreclosure. I realize every situation is different, but in the cases I know about that went through foreclosure all were put through the proverbial wringer throughout the drawn out process. All said they wish the process would have been clear cut. No on again off again trustee sale. No living in doubt every month wondering if this is the month they have to move. In every case it would have saved them money, reduce the stress immensely and helped them get back on their feet sooner if the foreclosure just would have happened as if this was a normal market.
There is also no question that we are working our way through the distressed inventory. Some project that we could return to nearly normal levels by the end of the year especially in the lower price ranges. We are already starting to see investors respond to market needs by financing the sale of the property and fulfilling the role that traditional lenders won’t. We are seeing the concern many municipalities had of too many rental properties seriously impacting neighborhood didn’t happen and that rental properties are starting to convert back to owner occupied through seller financing. Prices are rising. As prices rise current homeowners are finding they are less underwater than they were. Prices have a long way to go, but market forces are certainly in play. Everything is moving in the right direction.
Is it best to let the market work and get through this period faster or should government continue to interfere with the side effect of delaying the return to normalcy? I believe there is validity to both. Wanting to let the market work doesn’t mean you don’t have a heart. Just like wanting the government to intervene doesn’t mean you want to prolong the housing recovery. Part of the problem is we have been caught in the middle with trying to do both.
One of the first lessons learned in business is to make a decision and then focus on implementation. I read once that almost every decision is the correct one. It is effective implementation that ultimately makes the decision right or lack of effective implementation that makes the decision wrong. I think it is safe to say that lack of implementation has been a consistent theme of the government programs in the foreclosure space.
Whatever happens, as investors we will adjust – we always do. It is up to you to stay up to date on the changing investment climate and figure out how to respond.