Tuesday, August 11, 2009
George Lefcoe (University of Southern California) has posted How 'Spec' Condo and Tract Home Buyers Helped Sink Our Housing and Finance Markets: Should the Alienability of Their Interests Be Restrained by Law? on SSRN. Here's the abstract:
This paper begins by recounting the extent to which speculating buyers contributed more than proportionately to housing price volatility and the rate of mortgage foreclosure. The second section turns to the way spec buyers deceived mortgage lenders by committing occupancy fraud, claiming falsely that they were buying as owner occupants so they could benefit from more favorable mortgage rates and terms. The third section starts by describing the mischief spec buyers caused home builders and condo developers by signaling phantom housing demand, and degrading ‘for sale’ housing tracts and condo developments by leaving newly bought homes vacant or filling them with short term rentals. The fourth section explores the rationale for a government imposed ban on home flipping. This would be a publicly imposed constraint on alienability.
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