Two stories at CNN Money and one at NBC News when considered together are encouraging but are also a possible warning about the improving housing market. Titled “Big money betting big on housing,” tells us that hedge funds and major private investment firms are jumping into every part of the housing supply chain right now. Some of the biggest hedge fund managers are even scooping up undeveloped land in areas hardest hit by the housing crisis.
Paulson & Co. states that while land falls hardest in a downturn, it also rises the most in an upturn. The fund is betting on the accuracy of this statement, as over the past two years it’s purchased enough land in California, Arizona and Nevada to build 25,000 homes, and the company is aggressively scouting for more.
Private equity firms are also getting in on the game, with Blackstone Group spending $2.7 billion last year to buy 17,000 single family homes, and planning to continue to buy through 2013.
In a second CNN Money article titled “Construction jobs are difficult to fill,” we’re told that home builders are having trouble finding skilled construction workers. Employment numbers show that around 28,000 construction jobs were added in January, however builders are not finding enough workers to meet demand. It seems that when the bottom fell out of the housing market, a great many workers moved on to other job types and career fields. They’re not coming back at anywhere near the rate at which they left.
General building contractors who rely heavily on sub-contracted work are being told by their subs that there just aren’t enough workers out there at any labor rate. If there was enough workforce out there, there definitely would be more hiring.
Which brings us to the third article titled “Housing market already shows signs of new bubble...” Barely a year into the housing recovery, prices rose over 8% annually in December. That’s the tenth consecutive month of rising prices on a year-over-year basis. While prices are still down double digits from pre-2007 numbers, they’re soaring again and this is raising some red flags among analysts.
One factor in the fear some analysts have expressed is the major part of the buying is on the part of hedge funds and big money firms. While they’ve stated that they have purchased distressed properties to hold, fix up and rent over the long term, a spike in prices now could entice some of them to sell and take their profits. If there is indeed a “bubble” developing, it’s a new look, as we may not still be going down the drain, but there may be a major stoppage and backup in the wings.
Two stories at CNN Money and one at NBC News when considered together are encouraging but are also a possible warning about the improving housing market. Titled “Big money betting big on housing,” tells us that hedge funds and major private investment firms are jumping into every part of the housing supply chain right now. Some of the biggest hedge fund managers are even scooping up undeveloped land in areas hardest hit by the housing crisis.
Paulson & Co. states that while land falls hardest in a downturn, it also rises the most in an upturn. The fund is betting on the accuracy of this statement, as over the past two years it’s purchased enough land in California, Arizona and Nevada to build 25,000 homes, and the company is aggressively scouting for more.
Private equity firms are also getting in on the game, with Blackstone Group spending $2.7 billion last year to buy 17,000 single family homes, and planning to continue to buy through 2013.
In a second CNN Money article titled “Construction jobs are difficult to fill,” we’re told that home builders are having trouble finding skilled construction workers. Employment numbers show that around 28,000 construction jobs were added in January, however builders are not finding enough workers to meet demand. It seems that when the bottom fell out of the housing market, a great many workers moved on to other job types and career fields. They’re not coming back at anywhere near the rate at which they left.
General building contractors who rely heavily on sub-contracted work are being told by their subs that there just aren’t enough workers out there at any labor rate. If there was enough workforce out there, there definitely would be more hiring.
Which brings us to the third article titled “Housing market already shows signs of new bubble...” Barely a year into the housing recovery, prices rose over 8% annually in December. That’s the tenth consecutive month of rising prices on a year-over-year basis. While prices are still down double digits from pre-2007 numbers, they’re soaring again and this is raising some red flags among analysts.
One factor in the fear some analysts have expressed is the major part of the buying is on the part of hedge funds and big money firms. While they’ve stated that they have purchased distressed properties to hold, fix up and rent over the long term, a spike in prices now could entice some of them to sell and take their profits. If there is indeed a “bubble” developing, it’s a new look, as we may not still be going down the drain, but there may be a major stoppage and backup in the wings.