Happy days are here again, or so the thinking goes among real estate "investors." People who imagine themselves to be experts in real estate appraisal and management - and are probably as skilled in analysis and risk management as their day-trading equivalents in the stock market - are jumping into foreclosed properties:
Trouble is, the FHA's waiver of anti-flipping rules is exactly the kind of bad policy the nation's housing market doesn't need. The market needs honest price discovery and equilibrium, not artificial support, but smart policy is too much to expect in an election year.
Big-shots can't resist getting a piece of the action too. Serious investors are putting serious money together:
The big funds might have some potential if they're designed to replace bankrupt hotels with low-cost apartments. Trouble is, a lot of bankrupt properties are probably far from the dense communities and mass transit that would make them viable in some other configuration. That's part of the reason they went bankrupt. Duh.
It's ironic that stories about investors like these start appearing the day after the Fed ceased purchases of mortgage debt:
I'd love to see the looks on all of these people's faces as the long, slow increase in interest rates grinds them all into insolvency.
It's nice to know that some things never change.
Nota bene: Anthony J. Alfidi is long puts against IYR at the time this post was published.
Improbable as it sounds, house flipping -- that hallmark of American real estate mania -- is making a comeback. All around the country, but especially in some of the regions hit hardest by the housing slump, investors are swooping in on distressed properties and banging them into shape for sale to first-time home buyers, vacation-home seekers, and people looking for rental income.
Trouble is, the FHA's waiver of anti-flipping rules is exactly the kind of bad policy the nation's housing market doesn't need. The market needs honest price discovery and equilibrium, not artificial support, but smart policy is too much to expect in an election year.
Big-shots can't resist getting a piece of the action too. Serious investors are putting serious money together:
The Starwood Global Opportunity Fund VIII, which will target distressed debt and property, took in more than $1.8 billion, according to a person familiar with the effort. The Hospitality Fund II, which will invest in hotels, attracted almost $1 billion, said the person, who declined to be identified because the deal is private.
The big funds might have some potential if they're designed to replace bankrupt hotels with low-cost apartments. Trouble is, a lot of bankrupt properties are probably far from the dense communities and mass transit that would make them viable in some other configuration. That's part of the reason they went bankrupt. Duh.
It's ironic that stories about investors like these start appearing the day after the Fed ceased purchases of mortgage debt:
Yields on Fannie Mae and Freddie Mac mortgage securities jumped by the most relative to benchmark rates in five weeks as the Federal Reserve’s unprecedented buying of housing debt drew to a close today.
I'd love to see the looks on all of these people's faces as the long, slow increase in interest rates grinds them all into insolvency.
It's nice to know that some things never change.
Nota bene: Anthony J. Alfidi is long puts against IYR at the time this post was published.
