Cash for Clunkers—was it a hit or a miss? Well I suppose that it depends on which end of the deal you were on. As I recall, the government would give you $4,000 if you owned your car, and wanted to buy another—and were willing to allow your car to be squashed into a ball of iron. This gave you a down payment on your next car, and took an older model used car off the road, meaning that there would be less old cars out there and so theoretically this would encourage the sales of new cars and make the used car inventory smaller.
Seems like a good plan—especially since the government had just bought General Motors and Chrysler.
So how can we use this marketing model to help sell houses—especially since the government is running the loan programs that have left millions of people without homes?
There has to be an answer. And the answer should be simple. I used to work at a company that said if you couldn't explain your idea in the boardroom in two typewritten pages, it was too complicated an idea to sell to the public. Sort of makes you wonder about the Health Plan that is in an easy to read 2,000 page format.
And of course the bigger issue here is that houses cost more than cars (in most cases) and so the down payment number that a Cash for Houses program would generate, might be too small to actually use.
Unless...unless some bright minds were put into the mix and evaluated the options that might be available. The problem in Florida is the 1,500,000 foreclosed and vacant houses. This inventory keeps showing it's ugly head. Just when it seems that things are getting better, another bunch of cheap houses come on the market and drives the average price of homes down AGAIN.
It's my opinion that once we get these homes off the market, things may not exactly return to normal as we know it, but at least they should approximate the new normal that we will have to live with for now and years to come.
So how would “Cash for clunker Houses” work? As I see the bare bones structure of the program, if you were the deed holder of a property that appraised for less than $100,000, and were current or behind on your mortgage by less than 3 months, the government would take the house off your hands and give you $10,000 for the deed, that cash would have to be used as a down payment to buy a different house worth $100,000 or more. The feds could square up with the lender, and either bulldoze the house, burn it down or otherwise take it out of circulation.
Nobody who had more than $10,000 of equity would want to be involved in this concept, because they could sell the house for more than the government would give them. The lower end of the real estate market has a bunch of homes that probably should be removed from the general population anyway, and without casting any dispersion on any style of home, I would suggest that in general the cheaper homes that this would tend to affect may also be in need of cleanup fixup and maybe new windows and roofs.
But even more-so, the homes that are removed from the inventory of potential sale items will assist in stabilizing the prices of all homes that are offered for sale, and give the government a number of fine lots they can sell now or at some future time.
Obviously this needs some bright minds to offer input, and I would be happy to receive input from my readers that I could incorporate into this concept and shoot it off to the elected representatives that have a say in this sort of thing in Washington.
Dane Hahn is a real estate professional affiliated with Tarpon Coast Realty in Englewood, Sarasota and Boca Grande. You can reach him at firstname.lastname@example.org or call him at 941-681-0312.