It cannot be disputed that presence of empty homes in neighborhoods, as a result of foreclosures, unemployment, bankruptcy and/or owners having left, can have a serious negative impact on the values of the other homes in the area. The increased impact of this, resulting from a depressed housing market, has been felt not only at a local and state level but at a federal level as well.
Currently, nearly a quarter million homes owned by federal financing agents, Freddie Mac, Fannie Mae and the Federal Housing Administration have been foreclosed upon and are awaiting resale. In an effort to stabilize home values as well as reduce the large number of foreclosed properties on its books, the federal government has begun considering ways in which to change the utility of these types of properties.
Aware of the slow pace of home sales in the country, the federal government is considering the development of various programs to achieve its goals. One such program (in the early stages of consideration) is to sell empty, foreclosed homes in bulk, to private corporations which will then create rental properties. Since the rental market has not been affected by the economic decline in the same way as the housing sales market, the government proposes that this program would be a profitable venture for private corporations, and will serve to create jobs and provide affordable housing for individuals who cannot afford home ownership in the present economy.
On a local level, in comparison with the dilemma being faced by the federal government, condominiums and homeowner associations (“HOA”) should also consider ways to deal with the decline in property values within their communities as a result of an increase in abandoned or vacant units resulting from foreclosures. Once a unit or home is abandoned by its owner after the commencement of a foreclosure, or even before the income flow from the home to the Condominium or HOA usually comes to a screeching halt. As a result, the Condominium’s or HOA’s ability to maintain and upkeep the overall common property is detrimentally affected, which in turn negatively affects the home values, both monetarily and aesthetically.
Condominiums and HOAs may consider renting the abandoned units, by seeking a court order in the course of the bank’s foreclosure, or via its own foreclosure. It can be argued that this type of relief is the only way in which the Condominium or HOA can guarantee sufficient income to be able to preserve the overall property including the vacant homes, and ultimately stabilize or even increase the property values in the community.