Tags: Wall Street | housing | investors | prices

Wall Street Buying Fuels Housing Boom

By    |   Thursday, 06 June 2013 08:15 AM

It may seem as if it's Jack and Jills buying homes on hills that's fueling the torrid housing rally, but a lot of the demand is coming from bigger fish.

"Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets," writes Nathaniel Popper of The New York Times.

"The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Some are already wondering if prices will slump anew if the big money stops flowing."

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

The S&P/Case-Shiller index of home prices soared 10.9 percent in March from a year earlier, the largest 12-month increase since April 2006,

“The growth is being propelled by institutional money,” Suzanne Mistretta, an analyst at Fitch Ratings, told The Times.

“The question is how much the change in prices really reflects market demand, rather than one-off market shifts that may not be around in a couple years.”

In May, Fitch warned that in the areas of the country where the biggest housing rebounds are outpacing the growth rate, prices for single-family homes “could stall or possibly reverse” if the investors begin selling.

“We see economies that continue to struggle — we don’t see them recovering enough to justify this drastic increase in prices,” Mistretta said.

Blackstone Group, the world's biggest private equity firm, has been a major buyer, snapping up 26,000 homes in nine states.

Some are wary of the trend, including legendary real estate investor Sam Zell, chairman of Equity Group Investments. “An individual investor can buy 25 houses and monitor them,” he told CNBC last month.

“I don’t know how anybody can monitor thousands of houses. I just don’t think that the logistics of that produce real positives.”

Editor's Note:
Startling Proof of the End of America’s Middle Class. Details in the Video

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Economy
It may seem as if it's Jack and Jills buying homes on hills that's fueling the torrid housing rally, but a lot of the demand is coming from bigger fish.
Wall Street,housing,investors,prices
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2013-15-06
Thursday, 06 June 2013 08:15 AM
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