From The Modesto Bee
By J.N. Sbranti
January 14, 2012
In an effort to stabilize the city's real estate market, a federal stimulus program has spent nearly $1.5 million on eight Modesto homes that ended up being worth less than $1 million.
Example: Taxpayers paid $223,641 to buy and fix up a foreclosed south Modesto house that was built in 1992. But when the city's 16-month renovation project was done, the home appraised and sold for only $114,000.
The government lost $109,641 on that just completed deal.
Taxpayers also have spent $109,494 to buy and renovate a 1948-vintage two-bedroom home in Modesto's airport neighborhood. That house has appraised for only $55,000, and a buyer has yet to be found.
The federally funded Neighborhood Stabilization Program is being managed by the city of Modesto, which plans to resell an additional 18 or more rehabilitated homes this year.
The eight refurbished Modesto homes have cost taxpayers, on average, 34 percent more than appraisers determined they were worth after repairs were complete. That's an average of $61,487 each.
That loss is more than twice as much per home as a similar program run by the Housing Authority of Stanislaus County. The countywide agency has bought, renovated and resold 41 homes in the past two years, and on average it has spent 14 percent, or $21,869, more per house than the resale price.
Modesto officials defend how they have spent the federal money.
"We're buying the worst of the worst of the foreclosed homes, the ones private investors won't touch," said Cynthia Shallit, who now runs Modesto's stabilization program. …
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Economy Housing Market