Federal officials are hoping to launch a pilot program this year that will allow investors to purchase properties in bulk instead of selling them through retail listings or in public auctions.

Because of the increase in rental demands, some hard-hit neighborhoods may see some stabilization in their homes’ values and also be able to turn abandoned houses into family homes.

However, there are some that argue that this may hurt the market instead.

Can rental programs help the housing market?

 According to a paper written by Kenneth Rosen, a housing economist at the University of California at Berkeley, rental programs could help by:

• Reducing the foreclosed homes inventory and turning them into occupied homes again.
• By helping tenants that want to own a home re-build their credit in order to be able to buy a home again.
• A program like this would also decrease the bank-owned inventory. It’s estimated that if we include the shadow inventory (i.e. homes that are not listed yet, but will soon go on the market as REOs), the total number of foreclosed properties is actually four times as big as it is now.

Arguments against rental programs

On the other hand, the possibility of this program going live has become controversial. Some arguments are:

• Newer neighborhoods will be more affected by the increase in rentals, because the housing bust hit these harder.
• Some lenders will not lend to homebuyers if the condo they’re interested in is located in a subdivision with too many rentals. Affecting both private sellers and potential buyers.
• Investors will buy these properties at a deep discount, only to flip them and make an easy profit out of it.
• Only large investors will be able to afford to buy in bulk, giving them an advantage over smaller investors.

What do you think? Do you think that a rental program will help or hurt the housing market?