First, sorry the site disappeared again. I’m not sure why it happened this time — supposedly my card on file was declined, but there’s no record of any transaction having been declined recently. So not sure what’s up with that yet.
Second, I’ve been working on a post about fundamentalism that has become super huge. It’s 3800 words currently and I have quite a bit left to write. I keep thinking I’m going to finish it but there’s ever more to say on the subject, which is very important to me because, as some of you already know, I was raised as a hard-core fundamentalist Christian and know much about the subject from an insider’s point of view. Because of this I see the recent anti-West Islamic movie riots, murders, etc., from a very different perspective as most people I interact with, and I’m hoping to be able to make my perspective accessible to others.
In the meantime other big things have been going on. One of the biggest is that I’ve inherited some money, not a lot mind you, but enough to do something with beyond getting my bills caught up. I’ve been looking into the possibility of purchasing a house here in Pittsburgh. And I’m discovering some things that are pretty troubling.
Everyone knows that the housing market imploded a couple of years ago and that millions upon millions of people have been foreclosed on, thanks to one of the most unbelievable frauds ever perpetrated in history. Fact is, no one actually knows how many foreclosures have occurred, but a site called Statistic Brain does its best to cull what info actually is available — and according to Statistic Brain, there have been over 21.5 million foreclosures since 2006, with approximately 6 million of those actually having been repossessed by banks. (Feel free to double-check my math.)
That leaves a gap of 15.5 million homes in limbo, or approximately 11.75% of the 132,312,404 total housing units that exist in the US (if the census statistics are to be believed). Without subtracting the homes that have been repossessed, that’s approximately 16% of the total US housing market. These statistics are crude to be sure, and I encourage anyone and everyone to correct them — the point is, this is an absolutely massive chunk of wealth. Hang on to that thought momentarily.
In my search for accessible properties — ones I could potentially buy free and clear with my comparatively small amount of cash — I’m finding that perhaps three-fourths of these are part of the 6 million foreclosures that have been repossessed and put back on the market.
These foreclosure houses tend to be in safer neighborhoods. Lots of them are somewhere in the process of renovation — it’s quite obvious that many were purchased with the intent of flipping them, but got foreclosed on before the project could be completed. Most I’ve seen so far need largely cosmetic finishing. The would-be house-flipper first took care of structural issues such as plumbing, wiring, broken porch steps and the like and then lost the property before having a chance to replace cabinets, rip up old carpet, paint, replace broken windows, etc. These properties are quite attractive to someone like me because they are cheap, structurally sound, I won’t get mugged by some tweaker redneck, and I can fix the cosmetic issues myself for the most part.
But these properties also have ugly, ugly titles. Unpaid back taxes, unpaid utilities, possibly second mortgages, stacks of fines for unmowed lawns and unshoveled snowy sidewalks, and god knows what else, would all follow the title and possibly — if not in all likelihood — result in losing the property to whatever entity has liens against it. It would mean that someone like me could purchase a house with cash and then have it seized by a bank, the county, whomever, the very next day, and I would be shit out of luck for someplace to live and the money I’d forked over.
For this reason the three real estate people with whom I’ve spoken — a sales rep for a company that buys foreclosed homes from banks in bulk and then resells them dirt cheap; a regular real estate agent; and an exclusive buyer’s agent — have all insisted that I do not, under any circumstances, try to purchase a foreclosure house. It is very possible to track down all these “encumberances,” as they’re called, and take care of them so that the house title transfers clean. It happens every day. But I’ve had very little luck getting any of these guys to educate me regarding the process of buying a foreclosure house, and it’s been a struggle to get answers to specific questions about either the process or some specific property. I told the buyer’s agent that I am fully capable of understanding a complex real estate transaction, that I am capable of doing my own research in addition to having full title searches done, and that I’m willing to pay all encumberances on a title so long as the cost of the encumberances plus the house itself don’t exceed my budget — if I have ALL the information I need, I am quite able to avoid doing anything stupid. He told me I was being, and I do quote: “dangerously naive.” Am I? Then give me the information I need to not be naive for fuck’s sake. Don’t just sit there assuming I’m a lost cause.
Rather than help me understand anything, they all repeat the same mantra: leave this type of purchase to investors. Investors can lose money on a house here and there and it’s of little consequence to them. But since I can’t afford to gamble like that I shouldn’t even attempt preliminary research, apparently.
Needless to say this has been extremely off-putting. Hardly anything in life irritates me more than when people assume I’m a dolt (or just a girl perhaps) and treat me as such. But the more I thought about it, the more I realized: there’s a serious fucking problem here.
This is where that 16% comes in: if real estate people are unwilling to help lower-income people like me safely purchase a foreclosure house for cash, let alone with a new mortgage, it means 16% of the entire US housing market has effectively been handed to the investor class, for pennies on the dollar, and protected from normal market competition. Surely there are millions upon millions of people like me who would love to buy just one cheap foreclosure house to fix up & live in happily ever after. But we are evidently unworthy even of speaking with because we can buy only one house, not one hundred houses at a pop.
An investor can now buy a structurally sound house in a safe neighborhood for $16,000, put $10,000 worth of work into it, and resell it for $80,000 — to someone who requires a mortgage to buy it. I’m supposed to borrow $54,000+ at interest so I can hand it over to someone else free and clear? When I too could have had that property for $26,000 to begin with, and no debt — except I’ve been cut out? Are you fucking kidding me?
Moreover, those investors are getting a significant chunk of many, many houses’ rehabs for free. Someone else has already put $30,000 of $40,000 worth of improvements into a place and then had it ripped away from them — that person might as well have simply handed $30,000 to the investor and spared himself the manual labor.
This all constitutes a two-phase transfer of wealth from the lower classes to the filthy rich (as have all the imploded financial bubbles since the 1980s been such wealth transfers). The first phase occurs as the investor class snaps up a nearly incomprehensible amount of assets for pennies on the dollar without having to compete for those assets — in other words, all those people who got fucked by the housing collapse have, in effect, been robbed of their homes’ value by the investor class. It would not be robbery if those people were allowed to try to buy their homes back at the same pennies-on-the-dollar rate that investors can have them. It would be the housing market functioning normally. Housing prices will remain low as long as non-investors are denied access to all those foreclosure houses, and investors will go around grubbing them all up at everybody else’s expense.
The second phase occurs once the investor class owns all those assets — remember, we’re talking about something like 16% of the entire US housing market — and begins reselling them to the people who got fucked the first time around. These people will have to, once again, take out mortgages at interest and then hand that money over to the investor class. So everybody pays the investors full price, twice, for the same 21.5 million houses — and goes into debt to the same investor class for the privilege.
(That’s if the investors decide to sell. Maybe they just keep 16% of the US housing market for themselves, and make the rest of us pay rent and/or fight overseas oil wars on their behalf. Cause, you know, feudalism is all the rage these days.)
To reiterate: this is a very serious problem. Investors once priced millions of people out of the housing market; investors now benefit from the gatekeepers’ refusal to allow those same people access to price-crashed homes. This holds housing prices at artificially low levels: housing prices cannot recover so long as real estate agents — the investor class’ gatekeepers — actively prevent possibly millions of people with cash in hand from participating in the foreclosure market, because there is not enough demand to drive prices back up to reasonable levels. This in turn allows investors to continue sucking up properties for themselves in order to sell them back to everybody else, effectively forcing us all to pay for the same houses twice. Lining their own pockets with this double payment means that money doesn’t go toward other things, stifling economic recovery.
Not to mention that if the investor class ends up with anywhere near all of those 21.5 million foreclosed homes, municipalities all over the country will be plagued by absentee owners who don’t give a rat’s ass about the communities their properties affect.
Am I the only one who’s noticed this? Surely someone, somewhere is thinking about how this is all shaking out. Not only was the housing crash an unprecedented wealth transfer from the middle and lower classes to the ultra rich, the so-called “recovery” is shaping up to be a wealth transfer, too.