Vacant homes are trouble. There's no doubt about it. From attracting squatters, falling into disrepair or lowering home values, there's not a neighborhood in this city that doesn't have empty homes creating problems. More are piling onto the market every day, with little hope of a quick recovery.
So the Federal Reserve has decided it's time to do something. Its plan? Take all the homes that have been repossessed by FannieMay and FreddieMac and sell them in large chunks to investors who will then turn them into rental housing.
It's an ambitious plan. It has the potential to move the market forward after being in prolonged slump. But it has some potential problems, too.
How would the program work, exactly? How would they guarantee that the homes be used for rentals? What kind of financing would there be for investors? Just who would these investors be? We don't know yet. The fed says it's still working with administration officials and the U.S. Department of Housing and Urban Development on the specifics.
Wanting to know more, I called up Tom Feltner at the Woodstock Institute, a Chicago nonprofit that researches and provides policy solutions on topics like the housing market. They've been looking into the idea and researching the impact it might have. If it moves forward, it could have a great effect on Chicago's market, since our city has the second highest number of properties owned by Fannie and Freddie in the nation.
"The fed is looking at a number of different strategies to get properties back into productive use," Feltner said. "What we're concerned with is what is going to be the broader community impact?"
One clear concern is management. It's one thing to manage a multiunit rental building, Felter said. It's a very different task to manage 30 or 40 properties, single-family homes, spread out across the city. In addition, will the properties be priced affordably? The city already struggles with enough affordable housing.