I was having this conversation w/ my fiance' yesterday. I was telling her that there's about to be a housing boom (bubble), BUT, there will be an even harder bust this time around since they're inflating the housing market without us fully recovering from the 08 meltdown. Her father had been trying to sell his property for some time but has been unsuccessful. I told her that he'd be better off selling it at the top of this upcoming boom, but she disagreed. IMO, people who are stuck w/ crazy mortgages from the housing boom of a decade ago should be looking to sell when this next bubble inflates.
I still no comprendez. I only see housing in 2 ways. You're going to make out on equuity via appreciation or cash flow. A property that has positive cash flow unlikely builds equity. That's the trade off. Cash today be a slumlord. I can't see hedge funds dumping money into properties for some future projected return in 5 years. there has to be some benefit that's not obvious.
It's not unreasonable for them to do this: They are awash in cash with few other investment opportunities. Housing is depressed. Rents are going up. And housing is a real asset that should be inflation resistant. EDIT: another thought: it's an easy way to get 4:1 leverage. A PE shop can't even get that these days.
Another option is to run some owner financing while waiting out the 5 years. Offer the place out at a somewhat inflated price to some subprime folks for a decent interest rate. You are collecting mostly interest while the home theoretically appreciates. If they continue with payments or refi, fine...if they walk in a few years, that's fine too. I think this could work for a cash laden company that is going to be ok with holding the assets, which most banks are not. The other issue no one is talking about right now is the difficulty in getting loans. Most banks are requiring a 720 FICO and 20% down for the bulk of their loans, with no short sales/foreclosures on either party for up to seven years. There are a lot of people that are locked out of the buyers market with the current setup. If Blackrock came in and offered better deals on properties they own - especially in this environment - they could see decent returns with a relatively small amount of risk.
They are buying from everywhere, from flippers, banks, and listings on the MLS. Some are vacant, some are occupied. I also got the implication that these hedge fund MIGHT want to keep some of these houses vacant, but they didnt say why.
Exactly what I have been saying, there are millions of people who cannot afford the 20% down and have FICO scores under 700 on top of that they need at least 2 years of earnings and with over 15 million people unemployed where are housing prices going? Even if there is an uptick in housing prices it will be short, around where I live prices fell, but not as hard as they did in other areas and with people so used to a fixed 30 year at 3.5-4% once that starts to rise to say 4.5% 5% 6% buyers will back away. I dont know why people believe housing prices are going up, if anything they will rise but flatten out after that, there is no way housing prices any time soon are going jump 10-20% a year, not happening....aside from that check out your local area and check out the taxes, near me taxes are anywhere from $8,000 a year to as high as $50,000, looking in paper today I saw a house going for around 700-800k with a taxes around $25k a year. Of course you can go down to Georgia where the yearly tax rate is no more than say a $1000 a year!
Waste of time. You need to buy in the right place. Easy credit has been flowing since the era of low interest rates into East Asian property...Look at Hong Kong and Singapore property, many of their people who own property are now multi millionaires many times over from foreign inflows.
Sacramento y.o.y.(as of november) Home prices up 23% Phoenix Home prices up 40% San Francisco Home prices up 17.3% Houston, TX Home prices up 39.2% You can check your own market trends on Trulia.com