http://finance.yahoo.com/news/rising-home-prices-may-actually-173023075.html I have been talking about this. Finally, even CNBC is concerned about this issue. Hedge funds ruining everything!
How Rising House Prices May Actually Stall the Recovery
By bgamall4 Follow Fri, 30 Nov 2012, 10:28am 574 views 10 comments
In Las Vegas NV 89117
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Laguna Beach, CA
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Investors cannot sustain a recovery because they are basically shock troops. They go in, do their speculating, and then take their returns. Very few investors are in it for the long term (5+ years).
Housing will return to normalcy (as much as it can in this environment) when owner occupy buyers come back to the market. In Las Vegas, that was only 14% of buyers in October (compare that to 52% investor purchases).
I never thought I'd see the day when people who actually intend to live in the home become the minority in the housing market.
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I have seen this mentioned here and there, that investors are driving housing prices up. Are there any actual facts or figures backing this up or is it just speculation? I have anecdotal evidence it is true in my area but that's it.
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Laguna Beach, CA
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wave9x says
I definitely think it's just speculation.
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Scottsdale, AZ
robertoaribas's website
investors are definitely driving prices up. they are buying the homes, if they weren't prices would have continued to fall...
I suspect many investors are not long term investors. Hell, many of them flip the home in a few months after cosmetic repairs...
There is an incentive to hold a home for over a year as a rental: you get taxed on the gain as long term capital gains rather than ordinary income; Next year I believe that will be a 20% rate, but for someone with a good income, adding a huge lump sum from a home sale could cost a very large tax bill, so it certainly is a consideration.
the real question is the following: do the foreclosures run out before the investors do? In Phoenix, the foreclosure pipeline is emptying fast, but inventory is also beginning to add up. Not super high yet, but high enough to definitely slow price increases in many markets... at the current pace, we will definitely see a big drop in foreclosures in the spring, and probably short sales as well. Which one wins???? I'd say there is no way to know right now!
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Lafayette, CA
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Nawww...no chance.
Rising house prices will help the building industries, the lenders will have a party, and home "owners" will jump back into HELOCs and go shopping.
Obviously it's not sustainable but will certainly fuel years worth of excess if not a full decade.
We've transitioned into a boom-bust economic pattern that is far more similar to the 19th century than anything since World War II.
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Mountain View, CA
bmwman91's website
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iwog says
Agreed.
Too many people are either unaware of this or just don't think that it is something that they need to care about, and the private entities that basically control the government delight in it because it is a very effective wealth transfer mechanism for them. I guess it will take a few more cycles for things to get bad enough for people to get tired of it and demand/force change. Hopefully they will be able to when that point comes.
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Scottsdale, AZ
robertoaribas's website
I hope you guys are right! I'd like endless boom/bust cycles for me to analyze and strategize about!!!!!
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bmwman91's website
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Yeah, it's great for some people. Sucks for the rest of us suckers that just want to work a job and live their lives in peace.
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San Jose, CA
Mentality of Institutional Investors is to make money as fast as possible, and a lot of them. They don’t like to keep capital in fixed asset too long. Fast turn over brings the highest return. Soon they will realize that single family investments do not produce better return on money then stock market. Yet, sells is not just a click on the button.
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bgamall4's website
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wave9x says
Yes, 50 percent of August sales were cash only in Las Vegas and 45 percent of the sales were cash only in Phoenix. And I wrote this article about it:
http://www.businessinsider.com/the-1-percent-is-buying-up-all-the-real-estate-beware-of-tom-lee-of-jpm-2012-5