Menlo Park plans to artificially prop up home prices
Apparently, city officials in Menlo Park are planning to spend $1 million to prop up prices in East Menlo Park. The basic deal is that they will find delinquent homeowners and help them negotiate a refinance with a local bank. The city will pitch in 30% of the loan amount, and the homeowner has to pay the mortgage on the remaining 70%. When the home sells the city will split the appreciation with the homeowner 50/50. Supposedly East Palo Alto is considering something similar.
I personally go to East Menlo Park a lot for this restaurant called Back A Yard Grill . They really have the best jerked chicken, but that neighborhood is not somewhere you want to be after dark. The houses there are definitely not worth the 600k to 700k they sold for in the peak, and using public funds to keep prices that high seems pretty ridiculous. What do you think?
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You’re right. This is the most ridiculously thing I have heard in a while, after the Obama plan to prop up home prices, that is.
City governments are NOT in the business of ARTIFICIALLY making home prices elevated. They are NOT in the position to be buying real estate like this, and people! I am sure there are better ways to spend money. If Menlo Park has so much money, maybe it should build infrastructure, parks, PAY its teachers?
It would be interesting to see the details of the plan’s impact. If I understand it correctly, it is aimed not at keeping the prices high, but at preventing foreclosures. If there are lots of foreclosures, homeowners will have their house prices immediately drop, and may be able to request property tax reductions. If prices come up later, because of prop 13, their taxes won’t go up too much. So, in the long run it may be in city’s best interest to pay to prevent foreclosures, even if the house prices don’t go up a lot. But I would like to see estimated projections and detailed computations on this.