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PockyClipsNow
2012 Jul 19, 11:22am
Each year since the bust in 06/07 we get nothing but MORE AND MORE federal intervention in housing.
Finally they have it figured out what to do to make RE prices go back to the moon.
I think if Int rates continue downward slide - we will soon see 2006 bubble prices nominally. But they will be affordable with a 2% mortage.
How this is supposed to work long term I have no clue.
Its too bad Ron Paul is talking into a field of crickets.
I think a rational strategy for a buyer is to put as low a DP as possible (3.5% or less?) but get the lowest ARM loan rate you can get. Plan on rates going down and/or letting it foreclose if you end up with negative equity. We are going to live in a weird CCCP universe like this one for housing for a long long long time. Even if Rmoney wins he cannot undo all these federal programs to sky the housing market. (he wouldnt want to anway IMO)
JonSilence
2012 Jul 19, 5:17pm
In a nutshell: The Powers That Be have decided that the way out of the current housing mess is for Fannie/Freddie/HUD, via their 'REO to Rentals' program, to sell off properties for pennies on the dollar, IN BULK, to Wall Street investors with VERY big buck$. This is done with the stipulation that the homes must be rented out for at least 2-3 years before they can be resold. By doing this several problems are addressed: a huge dent is put into the million+ shadow inventory, the governmental selling entities raise bulk cash and save tons of time and labor (one BIG deal to sell many properties instead of many small deals to sell one property at a time), and the 'everyman' renter gets into a home that he needs because he likely got ousted from the home he owned via the foreclosure process. So, the Wall St wizards who got us into the housing mess a few years ago are now catching the falling stars at the very bottom and riding them back up for a handsome profit---of course.
justme
2012 Jul 19, 5:27pm
It appears that the "REO to rental" program is a horrific fraud against the taxpayers.
I mean, what the hell??? The same cretins that created the housing bubble are now permitted to pass Fannie/Freddie losses to taxpayers and at the same time time use taxpayer support and cheap FED loans to front-run the general population in the housing market, and PROFIT YET AGAIN at our expense.
This is absolutely outrageous! Only people who do not own a house should be able to buy foreclosed houses from Fannie and Freddie, and preference should be given to persons that DID NOT PARTICIPATE in the housing bubble (i.e. did
not have a house that got foreclosed).
This whole country is so corrupt it makes me sick. Programs that were supposed to "help homeowners" have morphed into corporate welfare and screwing the taxpayer.
How do we stop this outrage?
Much of the dry-up is because of the Fannie Mae sponsored 'REO to RENTAL' program that was announced at the beginning of March. While this program got some press initially, it faded out of the limelight quickly. However, this program is clearly responsible for some of the current dry-up of inventory being seen in Atlanta, Florida, Los Angeles, and the Inland Empire. The program's benefit to private investors is so promising that Oliver Chang, head of U.S. housing strategy at Morgan Stanley, who has written more about foreclosed homes as an investment opportunity than any other Wall Street analyst, left Morgan Stanley in April after the launch of the program so that he could start his own buy-to-rent housing fund:
"Chang is leading Colony’s initiative under a new management company, Colony American Homes. Colony expects to deploy $1 billion or more over the next two years in anticipation of creating a publicly traded REIT at the end of that time. By December [2012], it hopes to own as many as 7,000 homes and within 18 months, it wants to own 10,000. It began buying in April [of 2012] .
http://articles.chicagotribune.com/2012-05-22/business/sns-rt-us-investing-housing-morganstanleybre84l0zx-20120522_1_housing-recovery-housing-market-single-family-rental-homes
Los Angeles and and the Inland Empire are among the top three areas that are targeted by the program, which sells REOs to investors with the agreement that the properties will then be rented out for a period of several years before they can be sold again. These transactions are invisible and not conducted out in the open; there is no evidence of them in the MLS. It is all done quietly and privately behind the scenes:
http://realestate.aol.com/blog/2012/03/01/reo-to-rental-fannie-mae-dips-further-into-foreclosure-pool/
On a personal note, I just spoke with a close friend of mine who has an in-law (a multi-million $ veteran RE investor) who is participating in the REO to Rental program; the pre-packaged deals he is buying include multiple properties ranging from low to high end, 15 to 50 homes per package, with packages costing in the multi-millions. The homes must then each be rehabbed, rented, and held. These properties/packages do not come onto the open market.
As a result, inventories have seemingly dried-up almost overnight. Where have all the properties gone? What about the big 'shadow inventory' that everyone has talked about for so long? It still exists, but is now being sold in bulk, 'off the radar', to SHADOW BUYERS/INVESTORS.
Investment Funds Crowding Out Local Investors and First-Time Home Buyers:
http://bayarearealestatetrends.com/2012/05/24/investment-funds-crowding-out-local-investors-and-first-time-home-buyers/
Investors Aggregate Single-Family Home Portfolios For Rentals
http://news.theregistrysf.com/investors-aggregate-single-family-home-portfolios-for-rentals/
So, if you want to know the 'why' behind the current shrinking inventory problem--- a problem that just doesn't seem to make sense--- now you know at least part of the answer.
#housing