8 ms·

What about all the hedge funds that have bought 10's of thousands of houses? I heard not only are they raising the prices on the way up, but they aren't mainta

by steven2012 12y ago

What about all the hedge funds that have bought 10's of thousands of houses? I heard not only are they raising the prices on the way up, but they aren't maintaining the houses and screwing up the rental markets.

atwebb 12y ago
We're seeing similar activity in an area that we're still stuck with a house and renting out (don't buy houses in mid-07 kids, that market hadn't crashed yet). We've been approached by a few with very low offers (via an agent). I've been tracking sales in the neighborhood and every month or so another 4-5 houses that were never on the market are sold. They are then rentals shortly thereafter. I've been pretty surprised at what things are still renting at, I thought it would plummet prices (and it still may) but they seem stable at about .6-.70 cents/sqft. It's not the Bay Area or even the nicest place in town but I find it peculiar that large investors would be interested enough to buy up 1% of the houses in an area every month or so, though the prices seem pretty good and that'd be a great rate of return.
- allochthon 12y ago
  Reminds me of this [1]. Unsettling, to be honest. Finance helped to bring about the housing bubble and the 2008 crisis, and now it's purchasing depressed housing stock. [1] http://dealbook.nytimes.com/2013/06/03/behind-the-rise-in-house-prices-wall-street-buyers/?_php=true&_type=blogs&_r=0 http://dealbook.nytimes.com/2013/06/03/behind-the-rise-in-ho...
  - atwebb 12y ago
    Yep and it seems to make sense for them at the prices I'm seeing but I can't help but feel there's something else there. Also, the word "Blackstone" is an immediate red flag to me after going through a corporate merger with them.
  - muhfuhkuh 12y ago
    That's so strange, because to hear free-marketers and political armchair warriors speak of it, they placed the blame squarely on dumb homebuyers who couldn't afford their house, President Clinton, Barney Frank, and Fannie&Freddie. All the talk of the Financial Sector, Credit Default Swaps insured by AIG London advised by Blackstone, and 30:1 leveraging of Mortgage Backed Securities deepening the crisis is met with yawns and allegations of being a socialist hippie who hates business. Nope, it was the poor people who were too stupid and lazy to afford mortgages who were at fault. They were blamed for the 2008 crisis, and they'll be blamed for this bubble too. Oh, and the Communist Chinese too for good, Xenophobic measure.
kapilkale 12y ago
Is there evidence of them not maintaining the houses? How are they screwing up the rental markets? I work with hedge funds that do this in CA, and neither of your points strike me as true.
- steven2012 12y ago
  http://m.huffpost.com/us/entry/4151345/ http://m.huffpost.com/us/entry/4151345/ I can't find the article I read a few months ago but it had similar anecdotes.
michaelochurch 12y ago
There are a lot of speculators (domestic and foreign) buying US houses because of their appeal to corrupt foreign officials who need to reinvent themselves as legit corporate execs under new identities (and it takes 2-3 years to get the fake jobs and references in place; during that time, a person is living out of his house, which is what makes the Valley so appealing). I'm completely OK with the US as a place where people from all over the world can reinvent themselves and tell a second chapter of their stories. That's what it's been for hundreds of years, and what made it great. Almost every one of us has at least once ancestor who came here to escape trouble in the old country. I'm not OK with it when it means that Americans are priced out of their own housing, especially now because these corrupt foreign officials aren't even coming here, but just buying real estate just in case things go bad in their home countries. Not only does it make housing unaffordable for us, but there's the moral hazard angle as well: by allowing nonresident foreigners to buy so much of our best real estate, with a great proportion of those being corrupt officials or people seeking resale to them, we're effectively subsidizing corruption in the rest of the world. (Is it correct that every foreign investor buying real estate is a corrupt third-world ultra-HNWI? No, that's only about 1 in 4. The other 3 are speculators banking on the resale value to corrupt officials abroad.)
- jacques_chester 12y ago
  I've seen you say this a few times now. Do you have a source?
  - michaelochurch 12y ago
    There are millions of sources on the use of high-end real estate for foreign money-laundering operations. Like this one: http://nymag.com/news/features/foreigners-hiding-money-new-york-real-estate-2014-6/ http://nymag.com/news/features/foreigners-hiding-money-new-y... The question is: why are we allowing foreign speculators in our real estate market, prices where they are, in the first place? Once an average house costs more than 8 times the average income, you have to protect the homeland. Unless you've stopped caring about your own people.

atwebb 12y ago

We're seeing similar activity in an area that we're still stuck with a house and renting out (don't buy houses in mid-07 kids, that market hadn't crashed yet). We've been approached by a few with very low offers (via an agent). I've been tracking sales in the neighborhood and every month or so another 4-5 houses that were never on the market are sold. They are then rentals shortly thereafter. I've been pretty surprised at what things are still renting at, I thought it would plummet prices (and it still may) but they seem stable at about .6-.70 cents/sqft. It's not the Bay Area or even the nicest place in town but I find it peculiar that large investors would be interested enough to buy up 1% of the houses in an area every month or so, though the prices seem pretty good and that'd be a great rate of return.

allochthon 12y ago
Reminds me of this [1]. Unsettling, to be honest. Finance helped to bring about the housing bubble and the 2008 crisis, and now it's purchasing depressed housing stock. [1] http://dealbook.nytimes.com/2013/06/03/behind-the-rise-in-house-prices-wall-street-buyers/?_php=true&_type=blogs&_r=0 http://dealbook.nytimes.com/2013/06/03/behind-the-rise-in-ho...
- atwebb 12y ago
  Yep and it seems to make sense for them at the prices I'm seeing but I can't help but feel there's something else there. Also, the word "Blackstone" is an immediate red flag to me after going through a corporate merger with them.
- muhfuhkuh 12y ago
  That's so strange, because to hear free-marketers and political armchair warriors speak of it, they placed the blame squarely on dumb homebuyers who couldn't afford their house, President Clinton, Barney Frank, and Fannie&Freddie. All the talk of the Financial Sector, Credit Default Swaps insured by AIG London advised by Blackstone, and 30:1 leveraging of Mortgage Backed Securities deepening the crisis is met with yawns and allegations of being a socialist hippie who hates business. Nope, it was the poor people who were too stupid and lazy to afford mortgages who were at fault. They were blamed for the 2008 crisis, and they'll be blamed for this bubble too. Oh, and the Communist Chinese too for good, Xenophobic measure.

kapilkale 12y ago

Is there evidence of them not maintaining the houses? How are they screwing up the rental markets? I work with hedge funds that do this in CA, and neither of your points strike me as true.

steven2012 12y ago
http://m.huffpost.com/us/entry/4151345/ http://m.huffpost.com/us/entry/4151345/ I can't find the article I read a few months ago but it had similar anecdotes.

michaelochurch 12y ago

There are a lot of speculators (domestic and foreign) buying US houses because of their appeal to corrupt foreign officials who need to reinvent themselves as legit corporate execs under new identities (and it takes 2-3 years to get the fake jobs and references in place; during that time, a person is living out of his house, which is what makes the Valley so appealing). I'm completely OK with the US as a place where people from all over the world can reinvent themselves and tell a second chapter of their stories. That's what it's been for hundreds of years, and what made it great. Almost every one of us has at least once ancestor who came here to escape trouble in the old country. I'm not OK with it when it means that Americans are priced out of their own housing, especially now because these corrupt foreign officials aren't even coming here, but just buying real estate just in case things go bad in their home countries. Not only does it make housing unaffordable for us, but there's the moral hazard angle as well: by allowing nonresident foreigners to buy so much of our best real estate, with a great proportion of those being corrupt officials or people seeking resale to them, we're effectively subsidizing corruption in the rest of the world. (Is it correct that every foreign investor buying real estate is a corrupt third-world ultra-HNWI? No, that's only about 1 in 4. The other 3 are speculators banking on the resale value to corrupt officials abroad.)

jacques_chester 12y ago
I've seen you say this a few times now. Do you have a source?
- michaelochurch 12y ago
  There are millions of sources on the use of high-end real estate for foreign money-laundering operations. Like this one: http://nymag.com/news/features/foreigners-hiding-money-new-york-real-estate-2014-6/ http://nymag.com/news/features/foreigners-hiding-money-new-y... The question is: why are we allowing foreign speculators in our real estate market, prices where they are, in the first place? Once an average house costs more than 8 times the average income, you have to protect the homeland. Unless you've stopped caring about your own people.