The Morning Report
Get the news and information you need to take on the day.
Our reporting relies on your support. Contribute today!
Help us reach our goal of $250,000. The countdown is on!
The Housing Commission wants to try yet another tack to disperse the federal funding that arrived in San Diego in April: buying foreclosures itself, straight from the bank, and then reselling them to first-time buyers.
You’ll remember, the program’s first major snag was a 15 percent discount. Buyers were heading into a housing market filled with frenzy and bidding wars, and trying to get offers accepted well below the appraised value.
It wasn’t working so well for any of the three government agencies — the city of San Diego, the city of Chula Vista, and the county of San Diego — trying to disperse the $17 million in aid to help people buy foreclosures.
A revision to the plan in June allowed the buyers to ask for just a 1 percent discount, instead of the 15 percent.
Still, by last month, I’d yet to hear of a single buyer closing escrow on one of these deals.
Now, eight households have been able to purchase homes under the city of San Diego’s program, said Rick Gentry, CEO of the Housing Commission, which is administering the city’s $9.4 million piece of the pie.
But there are 50 other families that have been prequalified to purchase these foreclosures and have found an extremely frustrating environment, Gentry said. They’re getting beat out by investors with cash who can offer over the list price.
“One family has made 25 offers,” Gentry said.
So the city’s pursuing a parallel track. The Housing Commission board today approved a plan to allow the agency to approach banks before the foreclosures even hit the market, Gentry said. The Housing Commission would then buy the house straight from the bank, protecting that 1 percent discount, and resell it to a homebuyer under the program.
That means the agency can compete with the cash buyers, and keep some of the affordable, discounted foreclosures away from investors, Gentry said.
I asked if the commission would have to know for sure there was a buyer who wanted a particular house before the commission bought it from the bank.
“That’s one of our chores to work through” before presenting the plan to the city’s Land Use and Housing Committee on Sept. 2, Gentry said.
However, Gentry said he thought it wouldn’t be hard to sell a decent, attractive house in a nice area at a good price. “But it’d be nice to know you already had somebody to purchase the house,” he said.
I’ve been hearing a lot of ideas lately to get around this market reality that there are homes priced attractively to first-time buyers that are also magnetizing investors with cash.
Doesn’t this city of San Diego plan sound a bit like the one I wrote about in El Cajon last week? The City Council in El Cajon will be considering a proposal next week to use redevelopment dollars to purchase discounted foreclosed condos to sell to first-time homebuyers.
I’ll keep you posted on both of those proposals. Have you heard of any other plans like these? Leave a comment below.