The Obama administration and government-backed home financiers Fannie Mae and Freddie Mac and other agencies will announce a program to sell government-owned foreclosures in bulk to investors to be used as rentals, administration officials say, CNBC reports.
Currently, there are about a quarter of a million foreclosed properties on the books at Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), and millions more are soon to join them once paperwork delays are ironed out.
Fearing the damage a fresh wave of foreclosures will have on the economy, the government will sell them off to those who will turn them into rental units.
A pilot sales program will kick off in the very near future, according to administration officials, once details involving pricing and how the government will partner up with private investors to turn foreclosed properties into rental units.
"I think there is a fair amount of money in the wings waiting to buy, investors doing cash raises to buy properties on a large scale," says Laurie Goodman of Amherst Securities, CNBC adds.
"But that means they have to build out a rental organization; it means they build out a management company, because if you're accumulating a hundred homes in Dallas that's very different than running a multifamily building."
Rents, meanwhile, are set to rise, experts say.
U.S. apartment vacancies dropped to a 10-year low in the fourth quarter, according to real estate analysis firm Reis, Bloomberg reports.
Rising foreclosure rates and tough mortgage standards are sending more and more would-be homeowners renting.
"With the strong occupancy we had this year, we were really able to push rents," says Lori Mason Curran, director of real estate investment strategy for the property arm of Seattle- based Vulcan, which owns more than 500 units in the city that are more than 97 percent leased, Bloomberg adds.
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