The always interesting Mark Cuban has a fascinating idea for how to shore up the housing market on a long-term basis: Let people take them their houses public:

The rules could be very simple
1. The house is appraised by a company approved by the exchange that lists the houses.
2. “Shares” are set with a Par Value of 10pct of the appraised value. For a 100k dollar house, there are 10 shares potentially available. However at no point in time can more than 40pct of the “shares” in a home be sold. We dont want the opportunity for “hostile takeovers”
3. The price of the shares will of course be set by the market. In a hot market it will be set above par, in a tough market like today, it will sell below Par.
4. All Proceeds from the sale of shares MUST be used to pay down any debt on the home.

It would be appeal to investors because it allows them an opportunity to profit from potential upside in the real estate market. I can certainly see REITs jumping into this kind of security if it ever comes to fruition. It would also provide a nice alternative to foreclosure for people who are close to losing their homes. It would also create a real-time market for homes that aren’t for sale — It would help people interested in the industry get an idea of what homes are worth.

This entry was posted on Monday, August 20th, 2007 at 1:56 pm and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.