Mpls. Offers Biggest Home Buyer Carrot Yet
Starting April 2, the Minneapolis Advantage program will provide $2 million to fund 200 $10,000 deferred loans to buyers of foreclosed homes in certain Minneapolis neighborhoods. The loan is forgiven if the homeowner lives in the house at least five years. Information about the program will be available on April 2 by calling the agency or visiting its website. The Greater Metropolitan Housing Corp. administers the loans, which can be used toward a down payment or closing costs on a foreclosedhome or one that can be sold as a short sale (a lender agrees to a sale for less than what is owed on the mortgage). The program is available for houses in 26 neighborhoods throughout Minneapolis.
–“Agency Offers $2 Million in Deferred Loans” (Star Tribune, 3/20/09)
The Strib article doesn’t provide the web site. Here it is:
As a Realtor, I’m for anything that sustainably strengthens demand for housing, and specifically, foreclosures. Foreclosures are to the housing market what cancer is to an organism: a contagious disease that quickly spreads to nearby healthy “cells” and claims them, too.
However, under the category of “side effects” or “unintended consequences,” two thoughts:
One. There are a lot more than 200 foreclosed properties in Minneapolis at the moment. How is Minneapolis Advantage going to decide which properties — and which Buyers — qualify?
I can easily imagine the online equivalent of the latest Star Wars movie release or hot concert tour, where diehards show up in sleeping bags days before tickets go on sale.
Is that really the best way to parcel out such goodies?
Two. I have clients who just closed on a foreclosed Minneapolis duplex. I’m not sure that they would have qualified — the program has income limits that they may have exceeded — but it’s annoying to think that they just missed out on this program (and I’m just their Realtor!).
On a larger scale, you might call this phenomenon “waiting for an even BIGGER carrot.”
Whether it applies to interest rates, home prices, or buyer incentives, the effect is to teach Buyers that it pays to wait.
That’s probably not what policymakers are try to achieve at the moment . . .