We never learn. We never, ever learn that you don’t get rich by destroying wealth. We tried it for a decade in the ’30s — and turned a market panic into a Great Depression. We’re trying it now, with similar results. And we’re so bloody-minded to do it, even the private sector is pitching in. Read:
Bank of America Corp., faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.
The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co., Citigroup Inc., JPMorgan Chase & Co. and Fannie Mae are conducting or considering their own programs.
Disposing of repossessed homes is one of the biggest headaches for lenders in the U.S., where 1,679,125 houses, or one in every 77, were in some stage of foreclosure as of June, according to research firm RealtyTrac Inc. of Irvine, California. The prospect of those properties flooding the market has depressed prices and driven off buyers concerned that housing values will keep dropping.
“There is way too much supply,” said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., which works with lenders, government officials and homeowners to salvage vacant homes. “The best thing we can do to stabilize the market is to get the garbage off.”
People are broke. And the way we’re going to fix that is to raise home prices by knocking down perfectly good ones.
Listen up. This market won’t find a bottom until it finds a bottom. And it can’t do that so long as we’re doing everything we can think of to prop it up.
This market could have cleared a year ago, maybe two, if only the market had been allowed to work. I used to blame Washington. But now I blame Washington and BofA.