NEW YORK – Can you buy a house almost anywhere in the United States for $1 through HUD?
Since the program is a federal government program, the answer, perhaps not unexpectedly, turns out to be “Yes” and “No.”
HUD, the U.S. Department of Housing and Urban Development, has a website devoted to “About Dollar Homes.” The agency explains how its Dollar Homes initiative helps local governments offer housing opportunities to low- to moderate-income families.
However, as the HUD Resource Center explained to WND, homes for $1 are only to be sold to local governments and community, or faith-based, non-profit organizations helping to place low-income families in abandoned homes that HUD cannot sell through foreclosure auctions.
HUD Dollar Homes are single-family dwellings that the Federal Housing Administration, a division of HUD, acquired as a result of foreclosure.
Whenever the FHA is unable to sell a single-family house for six months, the property is placed in the Dollar Homes program.
“By selling vacant homes for $1 after six months on the market, HUD makes it possible for communities to fix up the homes and put them to good use at a considerable savings,” the HUD.gov website proclaims.
“The newly occupied homes can then act as catalysts for neighborhood revitalization, attracting new residents and businesses to an area. Local governments can partner with local non-profit homeownership organizations or tap into existing local programs to resell the homes to low- and moderate-income residents of the community.”
The HUD program attests to the reality that Detroit is not the only urban area in America where persistent high unemployment and long-term poverty have led to neighborhoods blighted by abandoned homes and deserted properties.
Now, five years into the Obama administration, economists say the U.S. has a “weak economy,” at best, in which government Bureau of Labor statistics, adjusted to account for long-term discouraged workers and others, puts unemployment at over 20 percent.
To find properties for sale, HUD provides a “HUD Homes” website that lists available foreclosure properties by state.
However, individuals cannot purchase the $1 homes directly. Only houses up for auction can be purchased, through bidding.
Moreover, only a few states have $1 homes available, even for local governments and non-profit organizations.
Individuals seeking to participate in the HUD $1 Dollar Home program, therefore, must contact local government agencies and non-profit organizations participating in the program.
Gary, Indiana, Gary, Indiana …
A New York Times story this week said as many as one third of the homes in Gary, Indiana, a once-thriving industrial city, are unoccupied, and the city is considering selling the homes for $1.
However, the opportunity to buy an abandoned home in Gary is limited to those who apply through the city government and meet the following requirements: 1) a minimum income of $35,250 a year for one person; 2) can demonstrate the financial ability to bring the distressed property up to code standards within six months after purchase; and 3) agree to live in the home for five years before receiving full ownership.
The Times reported that nearly 400 people picked up applications on the first day the program was offered, and the city hopes to choose 12 of the 25 finalists in a lottery next month.
“My target would be to sell 50 homes a year,” Mayor Karen Freeman-Wilson told the newspaper. “We’re getting these people to contribute as taxpayers. They can be part of the group that moves out, or they can be part of the group that invests.”
The Times further reported Indiana is one of 21 states that does not allow its cities to file for bankruptcy protection, according to the National Conference of State Legislatures. Gary’s liabilities amount to around $8.4 million, an order of magnitude lower than Detroit’s estimated $18 billion short-fall.
“Just 30 minutes from downtown Chicago, Gary was once a vibrant steel town with close to 180,000 residents in the 1960s,” Steven Yaccino reported for the newspaper. “It is now home to less than 80,000 people and battered by decades of industry layoffs and racial friction that caused waves of suburban flight, shrinking city coffers drastically.”
Yaccino noted that Gary, which is 85 percent black, has since struggled with high rates of unemployment, crime and fleeing businesses.
Clearly, selling some 50 homes to new owners for $1 per home in a federal government-sponsored HUD program will hardly make a dent in Gary’s inventory of 10,000 abandoned homes.
Foreclosure auctions, in which properties are sold on the private market for pennies on the dollar, are an alternative, but inexperienced buyers need to beware.
Foreclosure auctions tend to be dominated by savvy buyers, many of whom pool their money and have ties to the construction market, the New York Times warned in a separate article published in 2006.
The sad reality for many deteriorating inner cities is that abandoned homes become neighborhood blights whose ultimate destiny in the vast majority of cases is simply to be torn down, with the land left to return to nature.
Chinese buying up Detroit property?
It’s not likely that Chinese nationals who are flooding the U.S. housing market and paying top dollar are among the buyers of distressed U.S. properties at the cost of $1, because their net worth disqualifies them.
However, the private real estate market, including privately conducted foreclosure auctions, is a different story. In the private market, Chinese nationals with cash can buy what appears to them as bargain U.S. real estate, because of the relative weakness of the U.S. dollar under the Obama administration.
CNN reported Chinese buyers accounted for 18 percent of the $68.2 billion that foreigners spent on homes during the 12 months ending March 31, according to the National Association of Realtors.
At a median price of $425,000, the Chinese are buying more expensive homes than other foreign buyers, and they are paying all-cash in 70 percent of the deals.
In California, where more than half of the homes sold to foreign buyers have gone to Chinese nationals.
Fox News reported that after Detroit filed for bankruptcy July 18, Chinese nationals contacted Detroit-area real estate brokers, wanting to buy 100 or more properties at a time.
Fox News further reported the buyers in China were seeking to purchase the properties as investment opportunities, not residences.
What appears to be a craze among Chinese nationals to acquire distressed U.S. real estate is reminiscent of the move by Japanese investors in the 1980s to invest wildly in the U.S. real estate market.
At the peak of the 1980s real estate hysteria, Japanese investors bought landmark U.S. property, including investing in both the Rockefeller Center in New York City and Pebble Beach Golf Course in California.
Separately, the New York Times reported that Zhang Xin, one of the largest Chinese commercial real estate developers in Beijing, has joined with the Safra family of Brazil to buy a large piece of the General Motors Building in Detroit.
The newspaper also reported that Chinese investors or firms have purchased large hotels in California, including the Sheraton Universal in Universal City, and the Crown Plaza in Burlingame, near the San Francisco airport.
“Across the country, Chinese purchasers bought over $10 billion in U.S. real estate,” wrote Andrew Taylor, the co-founder of Juwai.com, the top Chinese real estate portal for U.S. real estate available for purchase. “They [the Chinese] make up 9 percent of foreign U.S. house buyers, second only to Canadians. Chinese buy more U.S. homes than do Indians, Mexicans, or the British.”
Taylor notes the mainland Chinese rank among the top five foreign nationals buying real estate in 44 U.S. states. The Chinese are the biggest foreign buyers in West Virginia and Massachusetts, and No. 2 in New York, Maine, Indiana, Missouri, Colorado, Wyoming and Hawaii.
Juwai.com displays more than 1 million property listings form 80,000 agents and developers in the U.S. and in 28 other countries. The website includes extensive Chinese-language editorial content, buying guides, market analysis and estimates of all costs involved with buying any particular property.
The website CreditSesame.com includes an interactive page, “The Foreign Faction,” that permits users to see the percentages of foreign buyers purchasing real estate in each of the 50 states.