Flip this house: City of Lancaster buying foreclosed houses
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
Good morning. Worth noting: The City of Lancaster has embarked on a $4-million buy-and-renovate program to purchase foreclosed houses that have been languishing on the market.
The city hopes to purchase and renovate 41 houses for $4.1 million, which by my math means the total budget for each flip is roughly $100,000. From Ann Simmons’ story in today’s L.A. Times:
The city took ownership of the first six properties beginning in May.... The city primarily targets foreclosed houses that are in extreme disrepair and have been vacant at least a year. ‘The houses we are acquiring are the ones that have suffered the greatest amount of damage during the time they were owned,’ said Lancaster housing official Elizabeth Brubaker. Bob Schack, president of the Greater Antelope Valley Assn. of Realtors, said the city’s effort to buy mainly older, poorer-quality homes that had been languishing on the market was a ‘win-win’ situation for all involved.... Lancaster’s program mainly targets depressed neighborhoods. The city is paying between $80,000 and $110,000 for the properties and will accept bids from contractors to renovate them. Proposed repairs would include environment-friendly features such as drought-tolerant landscaping and tankless water heaters. When sold, the city hopes to recoup the price paid for each home, including the cost of renovation.
Analysis/bloviation: There is a strong market right now for foreclosed houses in Lancaster and Palmdale, and it’s not clear that government intervention is necessary. A house that has been vacant and for sale for a year is, almost by definition, overpriced. A house priced at $80,000 that does not sell for a year is not worth $80,000. Is it possible there are no buyers for homes like this at any price, and the city is the only possible buyer? Possible, but not proved.
Your thoughts? Comments? E-mail story tips to Peter Viles
--Peter Viles