California Officials Try to Avoid Second Housing Hit - WSJ.com
Parts of Southern California hit hard by the housing crisis are maneuvering to shape the Treasury Department's plan to buy up troubled assets so that it doesn't wind up causing a second wave of pain in their communities.
[A development property is for sale in Colton, in California's San Bernardino county.] AFP/Getty Images
A development property is for sale in Colton, in California's San Bernardino county. Officials in areas of the state hit hard by the housing crisis, such as San Bernardino county, are pushing for a federal bill that would let local businesses and governments buy up some of the distressed real estate to ensure that it doesn't fall into the hands of speculators who have no interest in the local community.
Officials in San Bernardino and Riverside counties are determined to avoid a repeat of what happened 20 years ago, when the savings-and-loan crisis led to a massive selloff of distressed real estate in the area by the federal government's Resolution Trust Corp. Many of those properties, including foreclosed homes, were sold at fire-sale prices to investors who unloaded them quickly. In some cases, entire neighborhoods of what had once been homeowners turned into largely rental communities, further depressing property values and delaying an economic rebound.
"We don't want the cure to be worse than the disease," said Steve PonTell, a business owner in the vast area east of Los Angeles known as the Inland Empire. He said he is worried that neighborhoods could be seriously damaged if the Treasury "dumps" real-estate assets in such a way that leads to absentee ownership.