GHARIB: A key reason the housing turnaround is on hold, thousands of foreclosed homes sitting empty across the country, adding to the glut of homes for sale. Some analysts say renting out these foreclosed properties could help ease the housing crisis and it`s one option the Federal government is considering. Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Once a nation of owners, many a pundit has warned the United States is turning into a nation of renters. But that might just be one way to solve the nation`s ongoing housing crisis.
DEAN BAKER, CO-DIR., CNTR. FOR ECONOMIC & POLICY RSCH.: As a practical matter, you have a lot of homes that are sitting vacant and there aren`t a lot of people out there to buy them and if we insist on selling them as ownership units, then it`s going to depress prices further.
GERSH: Many of the homes in or near foreclosure are owned by the Federal mortgage giants Fannie Mae and Freddie Mac. Instead of selling those homes in foreclosure, the mortgage companies are considering becoming a landlord or forming a joint venture with investors to rent out the homes, but the most likely option may be an outright sale of homes to investors who will in turn rent them out.
BAKER: It`s a bit of realism. I wish they had come around to this approach three years ago, but whatever, you take what you can get.
GERSH: The Federal government — through Fannie Mae and Freddie Mac — accounts for roughly half of all foreclosure sales a year, roughly 475,000. Assuming those were converted to rental units instead of being dumped on the market, Goldman Sachs estimates the change would be enough to boost the annual house price appreciation rate by up to one percentage point a year.
ALEC PHILLIPS, WASHINGTON ANALYST, GOLDMAN SACHS: While that might seem like not a huge increase on a national basis, it could actually be more important in some local areas. So it`s still worth doing, we just don`t think that on a national basis it`s going to have a huge impact.
GERSH: But it could help bring down rent inflation by half a percentage point a year, a welcome break for many households. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.