Review of Billy Procida’s “Fixer-Uppers Can Help Fix Foreclosure Mess, Stabilize Home Prices” (Forbes 2011). Fixer-Uppers Can Help Fix Foreclosure Mess, Stabilize Home Prices. Retrieved from: http://www.forbes.com/sites/greatspeculations/2011/12/02/fixer-uppers-can-help-fix-foreclosure-mess-stabilize-home-prices/2/

When my older sister bought her first house, the first thing my mother told her was, “welcome to headaches.” She didn’t even say, “congrats,” or “I’m so proud of you.” What has the world come to when your own mother is not happy that her daughter bought her first house? I was expecting my mother to be proud of my sister the same way that she was proud of her for obtaining her Bachelor’s degree, Masters degree and getting married. The same emotion was not there. Instead her emotion was more like having pity for my sister. It was almost like looking into my mother’s past experience with her house. The look on her face said it all. Her house used to be worth double of what its worth now.

 

Everyone knows that foreclosures drive property value down. It is an unfortunate circumstance that is depleting America of its middle class. Homes are supposed to be an investment not a liability. Instead, the average home owner owes more on their house than what its actually worth. This occurs because a foreclosed property is bought at an auction and the auction price is recorded.

What if there was a way not to report what a foreclosed home sold for at an auction? Wouldn’t that stabilize property values? Well that’s Procida’s theory. He believes that, “if banks, etc lease distressed properties to builders, the foreclosed property value will never be reported. Instead, the value of the property after the renovations will be reported”(Procida).

Procida states, “if the bank or servicing outfit were to license the house to a contractor at the same price and terms, only the higher post-renovated value is recorded, not the lower price when the builder buys it. Since the banks and the government own millions of homes, they have a vested interest in keeping prices high.”

That seems like a great idea to me. I’m not a homeowner, but I do feel the effects of this horrible economy. One of my experiences with how bad the economy has gotten, was moving to a new neighborhood in 2009. I was still getting to know the area so when I wanted to dine out, I would google a restaurant and drive to the address listed. To my surprise for the first couple of weeks, most of the restaurants I would drive to were closed for business. I finally started to call the phone numbers listed for the businesses before wasting my gas and driving to the location. I’m so glad I did that because many of the businesses I called went out of business.

I also get emotional when I hear that 8.1% of Americans are  unemployed (NCSL.org April 2012 unemployment rate.) If home prices stabilize, I can bet more jobs will be created and less job cuts will occur. You know what they say, “what goes up must come down.” Lets just hope that what goes down must come up.

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To read the full article, please visit: http://www.forbes.com/sites/greatspeculations/2011/12/02/fixer-uppers-can-help-fix-foreclosure-mess-stabilize-home-prices/2/