It’s tiring to have to keep explaining this, but the housing “recovery” comes from two factors. One, banks have intentionally kept a lot of their inventory off the market. A LOT. Millions of homes. This, combined with the underwater homeowner catch-22 of not being able to list their home when they owe more on the mortgage than it’s worth, has led to artificially constrained supply. Then, on the demand side, institutional investors are scooping up homes in distressed sales and short sales, usually for cash, which has propped up sales. So artificially low supply and investor-led demand means higher prices. It’s really simple.
The investors have all started competing with each other, and suddenly the attractive option of purchasing homes on the cheap and eventually selling them has become less attractive. This is especially true if one firm is buying $100 million in homes EVERY WEEK.
The idea here is to rent out the single-family units until they appreciate enough in value to sell. Also, they may try to securitize the steady stream of rental revenue to lock in the profits. I’ve discussed repeatedly why this may be a pretty terrible idea. But everyone’s so happy to see rising home prices that they just pop the champagne corks.
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Originally Posted by sushilover
