Houses For Under 100K

WallI wrote about this a couple of months ago.  There are many homes on the market now for less than 100K.

There are houses available for as little as 25K.  We have not seen prices that low in a decade or more.

First time home buyers are attracted by the low prices.  I am getting so much email these days from first time home buyers that I have not been able to keep up with it and a friend of mine who is also a Realtor is helping me respond to them all.

There are a lot of people who would love to buy a home, or in some cases really need a home.   Yesterday I was contacted by a woman who has to move becasue her landlord is in foreclosure.  She would love to own a home of her own.  She is a hard working single mother with two young children.  I know another woman who has a great job and is raising her two nephews alone years after she raised her own children, she would love to have a place with a yard for the boys.  She almost has enough money to do it, but not quite. 

So on the one hand we have homes at incredibly low prices and on the other we have people who would love to own a home. 

Most or maybe all of the extremely low priced homes on the market need a bit of work.  The first time home buyer programs and the FHA and VA loan programs will not lend money to buyers who want to purchase these homes.  The City of St. Paul will not let people live in these homes until repairs are made.  Repairs cost money.

I have this weird idea.  What if the banks who own these properties fixed them up and then raised the price enough to cover the cost of the repairs?  I know that is a silly idea and banks don’t want to spend the money.  I suspect that if they did spend the money we would all come out ahead.  Jobs would be created, and local building supply stores would benefit.   The entire city would feel the impact as the registered vacant building tags would be removed from the doors.  There ate more than 1550 registered vacant building in the city of St. Paul.

Ceiling_2  
This particular home has 4 bedrooms and about 1600 square feet of living space.  It has oak wood work and floors and oak built-ins, a nice yard and a two car garage.  It needs a new roof, and two of the rooms need extensive repairs to the walls a ceilings. 

It has an almost new furnace, the plumbing looks to be in good shape, and the electrical needs to be upgraded.   It is listed for $60,000 dollars, less than a third of the average price for a home in St. Paul.  If the bank put 40K into it, and sold it for say 120K, it would be quite a bargain for a buyer, it could qualify for FHA financing, the bank would make a small profit off of the repairs, and someone would have a new home to live in.

Thanks for letting me take a short trip into fantasy land.  I really enjoyed the adventure.

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7 Replies to “Houses For Under 100K”

  1. There is an opportunity here. If done properly, local agencies such as CDCs or the City could potentially get this moving with just a bit of start-up money. It’s all a matter of getting something to happen.

    The main point is that St Paul is a great place to live, and people are still moving here. Yes, they prefer single family homes with nice amenities (including a garage!) but there is a market that exists even in this mess. We can move off of that, no doubt.

  2. Gee Erik now everyone in town knows that we are both squishy liberals. šŸ™‚ Honestly though I have wondered why the Neighborhood development folks have not gotten involved. Seems like an opportunity to me. maybe I should bend Ed and or Betty’s ear.

  3. Patient Buyer says:

    It would probably be a lot more effective if a non-profit wwould get involved.

    If you could get some startup money, then you get the houses on their way to habitability and here is the catch – low incom people could help work their way in. paint, clean, etc.

    I think that people would treat their property better if they had a hand in making it nice in the first place.

    The government would likely not be able to turn the project without a loss. You would have typical government waste, three supervisors for each person doing the actual dirty work. Just like our shovel-leaning highway crews.

    Perhaps the state or city could provide tax breaks for companies willing to do the work at a low fixed price.

    PB

  4. PB – the CDC’s are non-profits and the Betty and Ed I refer to run a non-profit. So i quite agree, and love the idea of potential buyers putting some skin in the game. As for the government I suspect that ultimately our tax dollars will be used for a bail out when the banks get in trouble. I would rather see the money used to fix up the houses. Would be great ot see a tax break too. I am sending this post along to my city council rep. Who knows maybe he will open his email and see it.

  5. Patient Buyer says:

    I realize that my tax dollars will be used to bail out the mess we are in. No avoiding it. I hope one day that the reward falls from heaven on those of us who were responsible, but I’m not holding my breath.

    And I agree – nonprofits are the best route.

    As far as someone having skin in the game, I also agree.

    People have far less of a propensity to destroy what they build with their own hands.

    Plus, the ‘sweat equity’ labor is free.

    Here is an idea:

    Give Mr. Low-income renter this deal:

    You buy the trashed house, we (the state or nonprofit) supply the materials for refurbishment along with expert assistance, and you slowly paint/clean/renovate your way in.

    No mortgage payments or taxes until the house is habitable and occupied.

    PB

  6. Teresa Boardman says:

    Lovely idea but like I said at the end of my post . . living in fantasy land.

  7. […] that data is best when it is fresh.  I have written about home prices and I recently found an article that I wrote in 2007 about how hard it is to find a home that is move in ready for less than 100K.  Home prices […]

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