Are Americans to Become Serfs in the New Real Estate Economy?
Over at DoctorHousingBubble.com, an article this week speaks negatively about the influence of investors, particularly the big players buying up foreclosures. The old Greenspan comment related to “irrational exuberance” is resurfacing related to real estate investing. The article states that Wall Street and the big banks and institutions are inflating this new asset class and creating a new boom and bust cycle.
Equity studies and charts are said to be highly distorted due to the 100% equity all cash purchases of investors. Comparing the equity in owned homes now to historical numbers distorts the conclusions, as so many homes have been sold since the bust for cash. The clear opinion of the article is that the primary vehicle for building the wealth of the average American is no longer going to be the home purchase American Dream.
More negativity in the article states that the reported benefits to the American family of the real estate recovery is simply not supported by the data. The many graphs showing an increase in equity overall distorts the reality of the situation, as so much of this equity is held by bankers, Wall Street and institutional investors. Rampant investment buying is contributing to higher rents, not a benefit to the masses who need to rent. Investors are still crowding out retail buyers in many areas as well.
While all cash deals are averaging around 39% of the entire market right now, that’s on a national average. In states like Arizona, it’s more like 60% for cash purchases as a percentage of all purchases. In hot recovery markets like California, competition is fierce, with buyers fighting over properties at prices more like the heyday in 2005 to 2006. From the article: “Rising home prices have come for all the wrong reasons: speculation, high level of investors, and artificially low interest rates. The market went into full panic mode just because rates went from 3.5 percent to 4.5 percent!”
Over at DoctorHousingBubble.com, an article this week speaks negatively about the influence of investors, particularly the big players buying up foreclosures. The old Greenspan comment related to “irrational exuberance” is resurfacing related to real estate investing. The article states that Wall Street and the big banks and institutions are inflating this new asset class and creating a new boom and bust cycle.
Equity studies and charts are said to be highly distorted due to the 100% equity all cash purchases of investors. Comparing the equity in owned homes now to historical numbers distorts the conclusions, as so many homes have been sold since the bust for cash. The clear opinion of the article is that the primary vehicle for building the wealth of the average American is no longer going to be the home purchase American Dream.
More negativity in the article states that the reported benefits to the American family of the real estate recovery is simply not supported by the data. The many graphs showing an increase in equity overall distorts the reality of the situation, as so much of this equity is held by bankers, Wall Street and institutional investors. Rampant investment buying is contributing to higher rents, not a benefit to the masses who need to rent. Investors are still crowding out retail buyers in many areas as well.
While all cash deals are averaging around 39% of the entire market right now, that’s on a national average. In states like Arizona, it’s more like 60% for cash purchases as a percentage of all purchases. In hot recovery markets like California, competition is fierce, with buyers fighting over properties at prices more like the heyday in 2005 to 2006. From the article: “Rising home prices have come for all the wrong reasons: speculation, high level of investors, and artificially low interest rates. The market went into full panic mode just because rates went from 3.5 percent to 4.5 percent!”