Wednesday, June 17, 2009

USA plan to drive up property prices by demolishing 40 per cent of the housing in some cities

Obama housing stimulus: If you want the price to rise, reduce the supply!

Mr Kildee treasurer of Genesee County, Michigan said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes. Most are former industrial cities in the "rust belt" of America's Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

A new state law passed a few years ago allows local governments to buy up empty properties very cheaply. The local authority in Flint has already demolished 1,100 homes in outlying areas and Kildee estimates another 3,000 will be razed.

Putting this into perspective, local government is using State law and taxpayers' money, naming their (very cheap) price to 'purchase' empty properties it deems undesirable and also to buy up the more desirable empty properties; then demolishing the 'undesirables' and offering to sell the 'desirable' properties to the very taxpayers whose money was used to pay for them in the first place. There is no mention of what happens if the rightful owners of the 'empty' properties decide they do not want to sell or don't like the 'very cheap' price assigned to the transaction.

Nolan Chart

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