Watchhttp://finance.yahoo.com/news/housing-already-shows-signs-bubble-162120345.html
When housing began to simmer back in 2002, prices were rising around seven percent a year, then eight percent in 2004 and a stunning 12 percent in 2005. At the time, words like "bubble," and "unsustainable," were uttered with every monthly reading. No one had seen home prices soar like that since the mid 1970's.
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Call it Crazy says
You think a property manager would keep his job long if he kept renting to tenants who destroyed the property?
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iwog says
Well, he doesn't find that out until AFTER the fact....
Is that a question on the rental application? "Will you destroy the place when you move out? Check "Yes" or "No"...
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Remember this article??
Och-Ziff hedge fund looks to exit landlord business
http://www.reuters.com/article/2012/10/17/us-foreclosed-hedgefunds-idUSBRE89G1TE20121017
....."One of the first big hedge funds to try to profit from a rebound in the U.S. housing market by investing in foreclosed homes is looking to cash out, even as other institutional investors are still getting in."
....."Earlier this year, proponents of investing in foreclosed homes were projecting a return of at least 8 percent a year from renting them out.
....."But the New York-based hedge fund is looking to sell now because the returns it is generating from rental income are less than expected and it is looking to take advantage of a recent rebound in home prices in northern California, the sources said."
I expect more to follow that same pattern....
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As a homeowner. I have absolutely no doubt we are in a bubble again and here's why:
1: There is no inventory. If inventory were normal, there would be less competition.
2: Interest rates are ridiculously low. They can't stay low like that forever. But in the meantime that has meant:
A: Market is flooded by investors buying up every low-ball home in existence
B: Money is artificially cheap.
3: Again- Investors are buying a lot of the stock. At some point the equation isn't going to work as well for them once the market catches up and levels off. Many will then sell all at once, cheapening the market.
4: Banks are not releasing a lot of their real estate holdings on the market but probably will once the market picks up sustained steam.
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underwaterman says
here is the actual link to the article:
http://www.reuters.com/article/2012/10/17/us-foreclosed-hedgefunds-idUSBRE89G1TE20121017
they own all of 300 homes in northern california... which is less than one day's sales.
If all these people are selling, why is inventory 15% lower today, then it was a year ago???
"they will dump them in droves" - says the village idiot
Even the article says they are selling them precisely because prices have gone up... Investors selling when prices are much higher than when they bought, there is concept you might try next time around!
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robertoaribas says
You still have reading comprehension problems... it never ends...
Call it Crazy says
They're NOT selling because they want to make a quick buck..
They're selling because the return on investment wasn't what they thought it would be.....
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"But the New York-based hedge fund is looking to sell now because the returns it is generating from rental income are less than expected and it is looking to take advantage of a recent rebound in home prices in northern California, the sources said."
yeah, my reading comprehension is fine... yours however...
I'm not surprised a samll hedge fund isn't making the rental return it expects. Landlording is a tough business, and they likely didn't scale things up well; Agents are piss poor at handling rentals, so just hiring agents is going to be expensive and lousy. Blackstone on the other hand, seems to have an excellent model.
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robertoaribas says
Ain't that the truth. I am on the HOA board at one of the place and one of the worth landlords we have in there is a real estate agent. He just told me he's renewing the lease on one of his 'great tenants' because he doesn't want to see her leave.
These are the same tenants that are the subject multiple complaints from other owners, won't follow the rules, have moved in a few additional family members, and are trashing his place. He's going to be on the hook for $10k in repairs once she moves out (if he's lucky).
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robertoaribas says
Incredible. You're obviouly seeing only what you want to see. This is what the article said. "But the New York-based hedge fund is looking to sell now because the returns it is generating from rental income are less than expected and it is looking to take advantage of a recent rebound in home prices in northern California, the sources said. "
They're trying to get out with their skin while they still can. They're smart and not in denial. Blackstone's probably shitting their pants too but no one's written anything about it yet. They're in way deeper.
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ELC says
already addressed above.
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ELC says
Thanks for pointing that out to him.... I wasn't going to try a third time to try and penetrate his "rose colored glasses"...
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Call it Crazy says
Blackstone's not looking to good lately either.
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underwaterman says
I wonder at what point, if any, the dumbed down public will start figuring out that, "if it sounds too good to be true it probably is."
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Call it Crazy says
as addressed above, (can you guys not read?)
Landlording is a hard business. Not every fund is going to set systems in place to do this well. If you just hire any old real estate agent to manage a rental they are going to A. put it on mls, B. never return calls about it, because 10% of one month's rent is small change, and C. get ripped off on all the repairs.
So, is your contention, because one property investment firm decides to leave, all of them will? I guess all cell phone manufacturers will quit too, because one quit before. And all tech companies!!! great logic guys!
Say, did you miss the point that they are selling at a profit? Funny that someone who sold a year ago didn't notice that little factoid?
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robertoaribas says
If they were making the profit they wanted on the rents, they wouldn't have sold.... just so happens, they got lucky because housing prices ticked up, so they didn't lose their shirts when they exited the game....
I hope YOU will be so lucky with your empire!
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ELC says
maybe a longer term horizon than 3 days?
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i see your logic: Only if 100% of investment firms find real estate the best thing ever, does it make sense to buy... good thinking! It couldn't just be that this particular firm wasn't good at it... (and yet they have still made rents, AND a profit from appreciation)
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thomaswong.1986 says
Could be that those places are actually really nice places to live versus some hell-hole in the middle of nowwhere....
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ELC says
Ugh. I bet you're one of these lofty-minded gimpers who go around calling people sheeple and shit like that...Most people with an IQ above room temperature readily comprehend that rates have been suppressed to keep the shit to shoe-level.
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JodyChunder says
Still upset that i don't like your tits?
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ELC says
Tee hee! Why would I be upset over another man's opinions of my beautiful physique? I'm just generally grossed-out by anyone fancying themselves somehow a peg or two above the fray. Especially a FLA cracker. That makes it, like...somehow...just so much worse.
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robertoaribas says
You really are a disgusting creep. What would your colleagues think if they read the crap you write on this blog?
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waiting_for_the_fall says
yes, after 500 personal insults from one stalker, I made a pun on his user name... how terrible of me.. I guess that renders all of my good real estate advice worthless.
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bgamall4's website
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robertoaribas says
I would watch this stock price very carefully. They may be in over their heads with real estate. http://www.reuters.com/article/2012/10/17/us-foreclosed-hedgefunds-idUSBRE89G1TE20121017
Sorry Robt, I see you supplied this link. That is what old age will do for you! But, they got scared for a reason. Perhaps it is because there are no first time buyers?
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iwog says
You even talk like you own them. You have them working for you and redeeming credits in your general store too? Hows it feel to live off the backs of others.
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edvard2 says
SFBA sucks, especially for families. It used to innovate. now is SillyConScammy. Its workers arent that great, and the cost of living and doing business stinks. For the cost of living the schools are a horrorshow. The weather is kind of crap compared to say SD, and raising a family here stinks. Cant wait to cash out. Soon, less than 24 months. Enjoy your suburb of shanghai and all its conspicuous consumption and the like. Anti family dump. Burned out husk of its former self and ultra corporate.
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bgamall4 says
It's a new business for these hedge funds. And it is a grimy down in the dirt business. I met some agents who work for one of the bigger ones here, they have handymen, painters, plumbers, electricians hvac repairment vetted and on call. they have a website that accepts the rent payment, that the tenant can fill out a repair request. Best damn system I've ever seen. Meanwhile, i'm playing around with excel and access, trying to do the best I can do!
The system I saw, one agent can handle hundreds of properties; everything is automated, the contacts, the repairs, the five day late letters, etc. The agents are graded on a performance metric. Custormer satisfaction surveys at every turn. THAT is how to scale single family home management!
Did the company that called it quits do that? Did they innovate quickly to do this efficiently?
So one hedge failed, another succeeds. That happens in every business, ESPECIALLY new business models. Two thai restaurants open up, one does crazy business, the other folds...
Well, my last home closes tomorrow. I don't plan to pursue anymore after that. If Phoenix does another crazy bubble, I'll sell a few in a couple years. If it flatlines, I'll just keep renting them. I suppose if it absolutely crashed again, I'd have to re-evaluate, and consider buying more. I feel great about what I've accomplished over the past 2 years, but, this ain't buying stocks or bonds. I'll be out there early tomorrow hauling off trash, cleaning up, steaming carpets, etc. It feels good thinking this may be my last rehab!
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Mick Russom says
Where you headed, if I might ask? Even just a general...reason I ask, there's a lot of handsome country out this way for a fair deal.
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robertoaribas says
The other hedge funds are holding on for one reason, another housing bubble. And that could happen, but will the people bite? That is the question. Bernanke wants this, thanks to Mike Whitney:
[“Federal Reserve Chairman Ben S. Bernanke said the Fed will take action to speed growth and a rebound in a housing market facing obstacles ranging from too-tight lending rules to racial discrimination….Bernanke said while tighter credit standards after a collapse in the subprime mortgage market were appropriate, “it seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery.”…
Bernanke said housing-finance authorities have taken steps to “remove barriers to the flow of mortgage credit” and referred to efforts by the Federal Housing Finance Agency and by Fannie Mae and Freddie Mac to clarify rules surrounding mortgages that go into default.]
The questions is, whether Bernanke will get the bubble to escape gravity.
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robertoaribas says
Isn't it doing it right now?
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robertoaribas says
If the market crashes and this time people can easily get loans you'll be cleaning up for the man.
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ELC says
No. Phoenix is bouncing back from an oversold condition. When you can buy a home with a mortgage, and the mortgage is half of the rent, the prices are 100% too low. And that is based on today's rents, which are still very low. As the US comes out of this recession over the next few years, rents will likely start increasing again.
ELC says
which makes utterly no sense... If people can easily get loans, prices will go up.
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robertoaribas says
My definition of sanity would be that prices go down, rates go up, and financing gets easier. The shouldn't result in prices going up or rents going up. Quite the contrary. And as I'm sure you know all markets transition from insanity to sanity then back again. Right? Or do you believe we're in the sane part of the cycle.
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ELC says
If your asking about sanity... asking Roberto is asking the wrong guy....
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From what I read this week, Blackstone is one of the main buyers of European commercial foreclosures, they buy them, and resell them for a profit.
Banks are now selling to smaller investors who will pay more so they can get rental income from the properties.
It's all specualtion, and these headge funds are collecting profits they can reinvest.
At some point Real Estate will be played out, and hedge funds will move on to something else.
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bgamall4 says
Slumlording is best suited to white trash. They're the only ones I've known to be successful at it.
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ELC says
I don't believe rates are going up any time soon. We are one hell of a long ways from any kind of wage inflation, and commodity inflation even seems to be waning at this point.
look, each year that goes by, the crash is one year further in the rearview mirror. take a real hard good look at your case shiller chart, and see what happened from about 1942 to 1945... Think long and hard about it. is 2013 1942? 2014? 2015? I can wait.
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robertoaribas says
Interesting statement. This is one thing we know, the Fed wants rates to go up. Bubbles are profitable on the way up the interest rate ladder. Once interest rates start going up, a bubble will offer teaser rates and the whole mess will start over unless people focus on what happened the last time.
In the UK they blew 4 housing bubbles in 40 years. That is one every 10 years. Wall Street is learning almost all this from the UK Square Mile, the seat of financial evil.
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bgamall4 says
sure. In reality, the place I live, the Fed is doing everything they can to keep rates down. bgamall4 says
The rules for qualifying for mortgages have been changed, and you have to qualify on the non teaser payment.
You really are living in a fantasy world!