Governor Bill Ritter yesterday received $34 million from the U.S. Department of Housing and Urban Development earmarked for the purchase and rehabilitation of foreclosures in Colorado. The money was allocated as part of the "2008 Housing and Economic Recovery Act" bill which was signed by the President last summer.
An additional $19 million in funds has already been allocated to Denver, Aurora, Adams County and Colorado Springs, bringing HUD's total investment in Colorado to $53 million.
Now the fun part - what will be done with the money? Who will do it? And when will it be done? And oh yeah, who's watching it?
If the money is used to purchase blighted foreclosures - and there are plenty in need of so much work that neither investors nor first-time buyers will touch them - it will be interesting to see how this new program impacts inventory. Will the government agencies flip them? Keep them as rentals? Do lease-to-own programs?
By my calculation, the state and its local governments could purchase about 350 homes this year in the $150,000 price range, or 700 homes if they aim to clean up the most distressed inventory at the bottom of the market. This is not inconsequential, and it will be worth following to see how a large, deep-pocketed government agency uses its resources in 2009.
With only 2.36 current active listings for every home already under contract in the sub $250k price range, it's possible that we could see low end inventory tighten up even more as the year moves on.