Monday, October 22, 2012

Where the Big Players Are Buying Housing

The Federal Reserve Bank of Atlanta has put out a very informative chart on where three big money players are buying houses, how much they are spending and a bit about their investment strategies:


Fed Atlanta concludes:

What this table implies is that institutional investors ramped up activity earlier this year and have indeed concentrated their investment activity within a handful of markets that were hit hard by the housing downturn. Acquisition strategies for these larger investors focus on mostly low-priced, distressed properties. 
This makes sense. The markets hit hardest by the housing downturn are also the markets where distressed properties make up a significant portion of the available homes for sale. However, data from CoreLogic indicates that the share of distressed sales is steadily declining over time. 
Distressed sales are declining because these giants, and others, are picking up what is on the market.  The housing downturn is over. From the supply side prices will be pushed higher. If Bernanke's new money printing gets into the system, prices will also be pushed higher from the demand side.


  1. sarc/on

    Lol, I feel so much better now that the Atlanta Fed has declared the housing downturn over. Because they have had such excellent predictive power before and during the crisis.

    I'm sure that these HF's propping the market will have no problem with cash flows to cover their loans or maintenance expenses (because you know, everybody living in a shitty apartment respects a billionaire landlord).


    Much like those that think HFT will actually let them sell or by on a spike that was never meant to get hit (because HFT doesn't offer REAL bids/offers, morons!), those that think housing is "recovering" because HF's are willing to gamble with CLIENT MONEY (it ain't THEIR money, honey!)


    Yeah, this will end well.


  2. Replace the cities & states with individual stock names, go back 10-15 years, & you will see the current modest housing stabilization will likely end just as badly.

    Sorry, but many Austrians think Central Bank printing means higher & higher prices. That is not the case in reality, nor even in theory; quoting from the Master, Ludwig von Mises, Human Action, chapter 31, page 797 in pdf version:

    Many economists take it for granted that the attempts of the authorities
    to expand credit will always bring about the same almost regular alternation
    between periods of booming trade and of subsequent depression.

    They assume that the effects of credit expansion will in the future not differ from
    those that have been observed since the end of the eighteenth century in
    Great Britain and since the middle of the nineteenth century in Western and
    Central Europe and in North America.

    But we may wonder whether conditions have not changed.

    The teachings of the monetary theory of the trade
    cycle are today so well known even outside of the circle of economists, that
    the naive optimism which inspired the entrepreneurs in the boom periods of
    the past has given way to a certain skepticism.

    It may be that businessmen [I would add "consumers" ] will in
    the future react to credit expansion in a� manner other than they have
    in the past.

    It may be that they will avoid using for an expansion of their operations
    the easy money available because they will keep in mind the inevitable
    end of the boom. Some signs forebode such a change.

    end of quote from Human Action.
    Not only are many economists, businessman, consumers, & public generally, aware of consequences of money printing, but so many were burned by the flames both in 2000 stock mkt crash; 2007-09 stk crash; real estate crash; that it is highly unlikely many will be burned so easily, so quickly.

    As a trader, I've always wondered why no attention is paid to considering that money printing could also be used to short stocks, as well as buy them.

  3. Great snippet from Human Action; makes perfect sense. THank you for it.

    Me, I remain highly skeptical of buying a house (we have been renters since '04 here in SoCal), and will remain fully invested in gold and silver (which I feel very comfortable will enter a bubble).

  4. The big boys have the advantage of access to money at extremely favorable rates, as low as .01%. It's not easy to compete with that.

  5. None of this will end happily for any one except the very fleet of foot or the expatriate. We have a full blown Marxist/Fascist, (you chose)Police State being deployed and it matters not the least who gets elected from the two criminal parties as they both use the same methods to gain, maintain power.
    Gold and silver are certainly excellent long term if you can escape with it or things return to a more normal cycle. Consider though that if you got trapped in 1920s Russia as it went totally Communist, gold and silver were worthless as no one could do anything with it except bury it for 70 years and then you were dead anyway by that time. You might want to consider having a place to have a garden as more important.

    1. I couldn't agree more. Those with money will win this game. If you have any better guy some gold/silver and take other steps to get your money out of banks and 401k's.

      Political system and 2 parties are an absolutely nightmare. American's illusion of freedom is going by the wayside. I hope people wake up because a diminishing middle class that's highly dissatisifed is dangerous to the upper class. They better realize that and figure out another way fast.

  6. These comments show how the herd mentality. the same people that thought that RE will continue to go up in 2005 are saying it will continue to go down in 2013....
    RE is best investment now, in a few years will be back to the old values...
    it is the cycle.

  7. Having the wealthy purchase the houses in distress is indeed the reason for the "boom" but let's face it, not everyone has the discipline to buy housing and budget for the subsequent expenses, the way ACORN thought they should be able to do. However thwarted the recovery is, it is what it is. And the wealthy will continue to invest and make money because...unless you want to live in a cave, camp out or live with mom again...EVERYONE must have a roof over their head when the cold winds blow. Exponentially, the population will always increase, short a major world ending calamity...and even then as Katrina has shown us...those that survive will still prefer a roof to a cave.