The first little pig built his house out of straw because it was the easiest thing to do
The airwaves are full of stories of economic recovery. One trumpeted recently has been the rapid recovery in housing, at least as measured in prices.
The problem is, a good portion of the rebound in house prices in many markets has less to do with renewed optimism, new jobs, and rising wages, and more to do with big money investors fueled by the ultra-cheap money policies of the Fed.
On my recent trip to Salt Lake City, Utah, after presenting to a bi-partisan audience in the Capitol building, a gentleman came up to me and introduced himself as a real estate agent. He explained that he’d been seeing something very strange over the past six months, where very well capitalized, out-of-state private equity funds had been buying up huge swaths of residential real estate with cash.
The effect, not surprisingly, is that regular home buyers are being outbid and eventually priced out of the market. Over time, these full cash offers at the ask get noticed and home sellers begin to raise their asking prices.
{ Chris Martenson/Zero Hedge | Continue reading }
[W]e were surprised to see an article in the very much mainstream, and pro-administration policies NYT, exposing just this facet of the new housing bubble. […]
Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states. Colony Capital, a Los Angeles-based investment firm, is spending $250 million each month and already owns 10,000 properties. With little fanfare, these and other financial companies have become significant landlords on Main Street. Most of the firms are renting out the homes, with the possibility of unloading them at a profit when prices rise far enough.
