Very Scary Housing Thread Again - Hedge Fund Buyers

[GHook93]

Housing Prices Are Being Dangerously Distorted by Hedge Funds & Other Big Institutions | Peak Prosperity

All you keep hearing is the housing marketing is rebounding, the housing market is rebounding. The marketed is flooded with buyers. That part is true, but the scary part is a LARGE chunk of the buyers are hedge funds.

Commericial investors used to stick to the rehap and flip or buying apartments for rent. Now they are entering the single family homes. They are buying them at discounts, coming in with cash and renting the homes. Sounds like great capitialism at work and for the most part it is.

However, this is having some dire consequences down the line. First it's artificially driving up home prices on regular home purchasers. Once the rates go up and eventually they will get back to he 6-8% levels, these homes will go down in value. These people will once again get stuck with homes that are under water. Second, it's driving up rent.

Take this thread on it's face and we should be VERY worried about the state of the housing marketing. The bubble burst in '07 happened because of policies that Clinton administration enacted. It took years of BOOM before it went bust. We are going to see the same here!

 

[AmazonTania]

60% of all homes purchased in 2013 were purchased as fully paid for Real Estate, which is typically Real Estate without a mortgage. These homes were purchased with ALL CASH.

Granted, these homes could have been purchased with leverage, but there is no doubt a much of speculators crowding out the regular home buyers.

 

[Snouter]

The "rebound" was a pile of bullshit. Most of the house purchases were those scumbag McMansion companies buying a dump for $850K tearing it down and then putting up an tasteless, ugly as sin McMansion for over $2M.

 

[Politico]

Unless idiots are out there buying more shit they can't afford they won't have anything to worry about.

 

[GHook93]

Unless idiots are out there buying more shit they can't afford they won't have anything to worry about.

That well over-simplified the bubble bursting, but this is a different type of market danger. The Hedge funds are buying up a large chunk of the market, fixing up the homes and RENTING them at a premium. It's causing home prices to rise artificially, but it's skyrocketing rent. Eventually rates will go up also and there will be another collaspe. The only problem will be that people won't be able to afford the rental prices either!

 

[Politico]

No it's not oversimplified at all.