As I wrote earlier this week, jobs and real estate are tied together - the increasing lack of jobs means we’ll see an increasing number of houses going into foreclosure.
What if you could solve both problems at once? What if you could create a program that would add jobs and decrease the number of mortgages going in default?
This morning, Treasury announced that it would direct another $486 million in American Recovery and Reinvestment Act (Recovery Act) funds to a handful of states where nonprofit organizations would hire contractors to build affordable housing. This is the fourth round of funding as part of a $3 billion plan to generate new jobs in the construction industry, which has lost more than 1 million jobs since 2006.
The states that get the goodies include Alabama ($36 million in funds), Arkansas ($29 million), Connecticut ($34 million), Georgia ($76 million), Louisiana ($114 million), Maryland ($44 million), Massachusetts ($51 million), Montana ($16 million), New Hampshire ($17 million as a second round of financing, bringing the total to nearly $28 million), New Mexico ($38 million), the Virgin Islands ($20 million), and Vermont ($10 million). The money will be delivered to state housing authorities, which will then hire contractors to build new affordable housing units.
“Today’s announcement of housing funds demonstrates how the Recovery Act is putting our nation on the path to economic stability, one community at a time,” said Treasury Deputy Secretary Neal Wolin in a press release announcing the program. “This initiative will help spur construction and development, create much needed jobs, and increase the availability of affordable housing for families around the country.”
If you’ve been following the new construction numbers, you know that this year, home builders expect to sell just 342,000 homes, down from peak sales of 1.2 million a few short years ago. The number of annualized sales is insanely low - way lower than the number of new homes sold in 1965 - and yet the pace of sales is even more snail-like, so there remains a 10-month supply of new homes on the market.
In short, no one’s building much these days.
But this bright idea of a program aims to solve several big problems all at once: providing good jobs that pay well, thus decreasing the number of mortgage defaults and increasing the number of affordable housing units for very low income Americans. (The median price of homes has fallen dramatically, so buying a home is much more affordable these days for Americans with cash, solid jobs, and good credit. But the costs of renting a home haven’t fallen as much, even as occupancy rate are skidding.)
Just think what we could accomplish if the government focused on killing more birds with the stones we’ve already given them.
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