Tag Archives: housing bubble

Wall Street’s New Get Rich Quick Scheme with Residential Housing

Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire, snapping up Queen Anne Victorians in Atlanta, brick-faced bungalows in Chicago, Spanish revivals in Phoenix. In total, these deep-pocketed investors have bought more than 200,000 cheap, mostly foreclosed houses in cities hardest hit by the economic meltdown.

Wall Street’s foreclosure crisis, which began in late 2007 and forced more than 10 million people from their homes, has created a paradoxical problem. Millions of evicted Americans need a safe place to live, even as millions of vacant, bank-owned houses are blighting neighborhoods and spurring a rise in crime. Lucky for us, Wall Street has devised a solution: It’s going to rent these foreclosed houses back to us. In the process, it’s devised a new form of securitization that could cause this whole plan to blow up—again.

Since the buying frenzy began, no company has picked up more houses than the Blackstone Group, the largest private equity firm in the world. Using a subsidiary company, Invitation Homes, Blackstone has grabbed houses at foreclosure auctions, through local brokers, and in bulk purchases directly from banks the same way a regular person might stock up on toilet paper from Costco.

In one move, it bought 1,400 houses in Atlanta in a single day. As of November, Blackstone had spent $7.5 billion to buy 40,000 mostly foreclosed houses across the country. That’s a spending rate of $100 million a week since October 2012. It recently announced plans to take the business international, beginning in foreclosure-ravaged Spain.

Read more at: http://www.motherjones.com/politics/2013/11/wall-street-buying-foreclosed-homes

Disclaimer: for information and entertainment purposes only

Next Housing Bubble? – Payments on Equity Lines Soon to Rise

bubble

Might the real estate market be heading for a new — and as yet little publicized — financial storm? Maybe.

Some mortgage and credit experts worry that billions of dollars of home equity credit lines that were extended a decade ago during the housing boom could be heading for big trouble soon, creating a new wave of defaults for banks and homeowners.

That’s because these credit lines, which are second mortgages with floating rates and flexible withdrawal terms, carry mandatory “resets” requiring borrowers to begin paying both principal and interest on their balances after 10 years. During the initial 10-year draw period, only interest payments are required.

But the difference between the interest-only and reset payments on these credit lines can be substantial: $500 to $600 or more per month in some cases. If borrowers cannot afford or choose not to make the fully amortizing payments that reduce the principal debt, the bank that owns the note can demand full payment and foreclose on the house if there is sufficient equity.

read more: http://www.washingtonpost.com/realestate/with-payments-on-equity-lines-soon-to-rise-real-estate-experts-fear-a-wave-of-disaster/2013/11/07/83dc9f3a-462c-11e3-b6f8-3782ff6cb769_story.html

Disclaimer:  for information and entertainment purposes only

Is The Sellers Market Starting to Cool?

From Karen Starr, The Grubb Co.

Q: Is the red-hot seller’s market about to cool?

 

A: I don’t know about you, but I have begun to sense a change in the temperature of our local real estate market in the past few weeks. Maybe it’s because schools are almost out for the summer and parents’ focus has shifted to the challenges inherent in keeping our kids entertained for the next few months. Maybe it’s due to the “battle fatigue” that both buyers and their agents are experiencing as they have repeatedly put forth efforts of heroic proportion in their attempts to secure the home they desire.

 

Up until early May, new listings that were well-located, well-presented and well-priced were selling literally in days, with an avalanche of offers and at sales prices often exceeding asking prices by 20 to 40 percent.

Have questions about the value of your home?  Contact the appraisers at www.scappraisals.com

 

As we moved full swing into the spring market, inventory increased significantly, at least in the East Bay where I work and we now often seen fewer offers presented on new listings, with some homes even “languishing” for several weeks on the market prior to receiving an offer. Imagine that! I remember when 3 to 6 months was the “normal” marketing period for a new listing.

 

We are in a market transition of some sort here. Whether it is due to impending summer, buyer fatigue or increased inventory remains to be seen. Maybe it’s all of the above?

 

In the coming months we will most likely see asking prices more accurately reflect the actual current market value of the house rather than be priced in anticipation of the overbidding that was prevalent earlier.

 

Prices/values are not dropping; yesterday’s sales are the comparables used to establish current market value. Buyer demand remains high. The number of offers per listing may be fewer but houses will sell at closer to their asking price making it easier for buyers to gage where they must go, price-wise, in order to prevail.

Read more: http://www.sfgate.com/realestate/article/Sound-Off-Is-the-seller-s-market-starting-to-4587886.php#ixzz2Vk6egHjL

Disclaimer: for information and entertainment purposes only