A key source of affordable housing inventory was cut in half over the last three years, resulting from well-intended but heavy-handed efforts to keep delinquent borrowers in homes.

That key source of affordable housing inventory: distressed properties sold to third-party buyers or repossessed by lenders at foreclosure auction. Once the transfer of ownership occurs at foreclosure auction, a distressed property can be renovated and returned to the retail market as affordable housing for homeowners or renters.

“[I am] renovating homes at a reasonable price so that people in our community can hopefully have good quality, affordable housing to purchase,” said Pam Franklin, a Kansas-based Auction.com buyer who purchases one to two distressed properties a year and resells them to owner-occupants after renovation. “[My renovated homes are] reducing the number of rental properties, which in our town has become a source of demise.”

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Affordable housing inventory is limited due to foreclosure prevention efforts