The Obama administration is considering getting into the home-rental market, according to a new report by The Wall Street Journal‘s Nick Timiraos. The problem that this scheme is intended to address is that while home sale prices are going down, rental prices are going up, pricing those who lived in now-foreclosed homes out of the rental market, as well. As Timiraos writes:
Renting out homes could cover the costs of holding the properties until they can be resold once markets stabilize, potentially turning a profit for mortgage titans Fannie Mae and Freddie Mac or the Department of Housing and Urban Development, which handles foreclosures on loans backed by the Federal Housing Administration.
But scattered-site rental programs could require the government to become a national landlord, an area where the mortgage firms have little experience. They also pose accounting challenges that could produce big upfront losses…
Investors would rehab homes, run the leasing process, and contract with national property management firms to handle day-to-day tenant demands.
The government could keep a stake in the venture, modeled on loss-share transactions by the Federal Deposit Insurance Corp. Officials have received interest from around a half-dozen private investors, according to people familiar with the matter.
I don’t care how much support this idea has received from “around a half-dozen private investors.” If they’re private, let them buy the properties themselves and rent them out. The federal government, which did so brilliantly with Fannie Mae and Freddie Mac in recent years, should butt out of the nation’s privately-held real estate. Why this administration should intrude one centimeter farther into the lives of its citizens is beyond me. The government could create incentives for private investors to rent low-cost housing to those in need. But incentivizing the private sector is one thing. Becoming a national landlord is another. Such an idea sounds like the sort of thing a Chicago community organizer might organize his community to protest.