Housing Investor Claims Investors Aren’t Driving Housing

Bullshit? From Bloomberg:

Investors Aren’t Driving the Housing Recovery, Chang Says

The U.S. housing recovery is being driven more by buyers seeking a place to live than by investors, said Oliver Chang, a former Morgan Stanley analyst and proponent of bringing institutional capital to rental housing.

Purchases by owner-occupants seeking to take advantage of mortgage rates that are close to a record low have been the biggest factor in rising home prices and sales following the worst housing crash since the Great Depression, according to Chang, who left Morgan Stanley last year to co-found Sylvan Road Capital LLC, an Atlanta-based single-family home rental investment fund.

“It’s possible that investors are less in the driver’s seat and more along for the ride,” Chang wrote in a note before the Information Management Network conference on single-family rentals that starts today in Miami. “The housing recovery appears to be broad-based and here to stay, although not because of the entrance of institutional investors into the space.”

Private-equity funds, real estate investment trusts and high-net-worth investors have raised more than $10 billion to buy homes to rent, seeking to take advantage of prices 29 percent below the 2006 peak and rising demand for rentals from Americans blocked out of homeownership. Blackstone Group LP (BX), the world’s largest private-equity firm, has spent more than $4 billion to buy 24,000 rental homes in the past year.

While large investors have been credited with being leaders of the recovery, they “represent a minuscule portion of the total housing market,” Chang said in his report. “It’s a good thing that owner-occupied buyers are driving sales and price increases — it means that there is some level of increasing fundamental demand.”

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58 Responses to Housing Investor Claims Investors Aren’t Driving Housing

  1. Juice Box says:

    Hurry up and buy before rates go up!

  2. grim says:

    Mmmmm, took out the new 8lb splitting maul for a test drive this morning. Hydraulics are for sissies.

  3. Painhrtz - Doc Daneeka says:

    Grim agree been splitting wood since i was 12. though as i advance in age I’m starting to see the benefits of a log splitter. We did 2 cords up at the cabin in 3 hours. would have taken my FIL and I 2 days by hand and a lot of the time in the hot tub afterward

  4. Mike says:

    Good Morning New Jersey

  5. grim says:

    My big question is where are investors buying. West? South? Northeast? I have a feeling it’s likely in the same sand/bubble states that saw huge new construction, and are also non-judicial foreclosure process.

    Foreclosure bulk sales have been extremely secretive, those that have been executed and had some kind of news published on it, seems to be focused primarily on west/south markets, with some occasional snippets of Atlanta and Chicago.

    I’ve been closely watching the tax records of recent sales lately for anything that would be indicative of investor buying (same company name listed across multiple properties, high volume of non-builder LLCs, etc), but the vast majority are still ‘plain ol’ names’, which may or may not be investors, but they certainly aren’t bulk.

  6. JJ says:

    Treasury demand increased to briefly push yields down to their lowest levels of 2013 early Tuesday morning. Driven by weak economic data out of China and Germany, the 10-year note hit a yield of 1.646% before retreating back to 1.670%, still a fall of nearly 3 basis points on the day. The 30-year bond yield was down nearly 3 basis points on the day to 2.852% while the 5-year note yield was down 1.5 basis points to 0.679%.

    This is part of reason I think we are seeing lots of cash deals despite low mortgage rates. First buyers give a little bit of discount for cash 1-5% and in a tie breaker, both folks same offer cash wins.

    3.4% sounds great on a mortgage but not when you consider 5 year treasuries pay only .679% and you have to pay a few thousand extra up front to get a mortgage. Plus vacation homes and rental properties are what investors are buying and on those homes you pay closer to 4% which is like 120 bps above the 30 year bond.

    Now mortgages are better way to go to employ leverage. But I think investors like me are taking baby steps. Folks would rather buy one investment property in a great deal for 300K cash then take 300K and put 10% down each on ten investment properties with a total of 3 million in value, which is what they would have done in 2004

  7. JJ says:

    http://www.auction.com/New-Jersey/residential-real-estate-home-auctions.html

    several pages of NJ investor homes for auction right now.

  8. Juice Box says:

    Tsarneav brothers shoot out pics taken by a homeowner directly in front of where they made their stand against the Police, notice the hole in the wall and chair. Bullets were flying everywhere that night.

    http://www.getonhand.com/blogs/news/7743337-boston-bombing-suspect-shootout-pictures

  9. DL says:

    From ZH via the FT.
    Socialism is a dirty word in many parts of the US. After all, America is a global symbol of free markets, muscular capitalism and the small state. Yet somehow the government has turned its mortgage market into a giant nationalised enterprise on a par with China’s Red Army or Britain’s National Health Service.

    US mortgage finance vehicle Fannie Mae, created by Franklin D Roosevelt to drag the US out of the Great Depression, underwrote around one in five mortgages during the 1940s. It was seen as the archetype of Keynesian intervention. Yet Roosevelt’s efforts have been eclipsed by those made by 21st-century governments around the world to pull their economies out of the post-credit crunch tailspin.

    Today, in the US, almost nine out of 10 mortgages issued in the US are subsidised by the state … Housing, in other words, has become an arm of the state.

  10. chicagofinance says:

    What a fcuking liar…..he’s selling REITs….he is not going to say….I am offering up the biggest piece of sh!t in the world and you will be lock-in while the market goes into the sh!tter and you get a huge haircut by 2018……..

    “The U.S. housing recovery is being driven more by buyers seeking a place to live than by investors, said Oliver Chang, a former Morgan Stanley analyst and proponent of bringing institutional capital to rental housing. Purchases by owner-occupants seeking to take advantage of mortgage rates that are close to a record low have been the biggest factor in rising home prices and sales following the worst housing crash since the Great Depression, according to Chang, who left Morgan Stanley last year to co-found Sylvan Road Capital LLC, an Atlanta-based single-family home rental investment fund.”

  11. chicagofinance says:

    non-traded residential REIT……crowded trade….and you are locked-in AND interest rates will eventually go up…….there is no excuse to buy this stuff except for a financial advisor’s commission…..

  12. Brian says:

    Crazy pictures. Did you read the comments at the bottom? A lot of truthers, conspiracy theory wackos etc. I guess they think it was staged or a fake or something. Idiots.

    9.Juice Box says:
    April 23, 2013 at 8:45 am
    Tsarneav brothers shoot out pics taken by a homeowner directly in front of where they made their stand against the Police, notice the hole in the wall and chair. Bullets were flying everywhere that night.

    http://www.getonhand.com/blogs/news/7743337-boston-bombing-suspect-shootout-pictures

  13. Comrade Nom Deplume, Bostonian says:

    REITs. They’re not for breakfast anymore

    http://www.cnbc.com/id/100660846

    An idea I was looking to float was the cooperative or mutual REIT. The idea is that wealthy folks will contribute their properties in exchange for shares and become renters. But this is only viable in an environment where their tax benefits are stripped and they don’t get MID, Sec. 121 exclusion, property tax deductions, etc. Logistics of basis and accounting are also a nightmare to manage. And most folks would look to trusts first. So I’ve shelved that idea for now.

  14. joyce says:

    They probably also think a jumbo mortgage is a asset (not a liability).

    Ragnar says:
    April 22, 2013 at 10:54 pm
    Joyce,
    Apparently some people in Morristown are so full of town pride that they think a townhouse overlooking “the green” is an asset rather than a liability.

  15. joyce says:

    Bearsfan,
    I opened your link from last night then immediately got some virus/error messages … the timing could have been a coincidence, but I thought I’d ask anyway if you had any problems?

    BearsFan says:
    April 22, 2013 at 8:50 pm
    Gotta love mr Flynn

  16. Juice Box says:

    re # 13 – I am waiting for the news on where they got the guns. There is no registered weapons in their names.

  17. JJ says:

    David Learner thinks it is a great investment.

    chicagofinance says:
    April 23, 2013 at 9:02 am

    non-traded residential REIT……crowded trade….and you are locked-in AND interest rates will eventually go up…….there is no excuse to buy this stuff except for a financial advisor’s commission….

  18. JJ says:

    Prices jumped 15.3 percent from a year earlier in the Pacific area, which includes California, Washington and Hawaii. In the Mountain region, including Arizona, Colorado and Nevada, the gain was 14 percent, the FHFA said. The Middle Atlantic area — New York, New Jersey and Pennsylvania — had the smallest increase, at 1.9 percent.

  19. Painhrtz - Doc Daneeka says:

    Nom I truly envy you and I guess Christie really did not want the presidency afterall

    http://abcnews.go.com/Politics/OTUS/chris-christies-gun-gamble/story?id=19018480#.UXZ6Zit4a88

  20. Comrade Nom Deplume, Bostonian says:

    [17] juice,

    Mass is as difficult as NJ, perhaps more so. If you move to NJ with guns, there is no registration requirement. Not sure about Mass but I think you have to get an FID card for long guns and old be forced to surrender handguns if you don’t get state police permit. And that’s just to possess. No one gets concealed carry in Mass unless you’re connected.

  21. Comrade Nom Deplume, Bostonian says:

    [20] pain,

    I never wanted a 50 cal so I’m not better off here. And, IMHO, these proposals will tick off liberals much more than conservatives. Stay tuned.

  22. Comrade Nom Deplume, Bostonian says:

    [19] JJ,

    That trend is supported by the reason I’m not much interested in buying here in PA. The megatrend is out-migration for both jobs and people. No future for housing price increases when everyone looking to buy has decamped south and west.

  23. FirstTimer says:

    Hi All,
    Have a question about mortgage loan. My lender (First Financial Services), has offered a $4000 lender credit. However, it is not listed on the GFE. It is present on the Fee worksheet and the transaction details of the loan application itself.

    The reason that my LO is giving for this, is that they do not charge any lender fee (origination etc.) and hence it cannot be on the GFE. Is this accurate?

    Also, how can i make sure that it is binding on the lender to provide the credit if it is not on the GFE?

  24. Brian says:

    http://www.bloomberg.com/news/2013-04-22/boston-hero-looked-guy-with-bag-straight-in-the-eyes.html

    Not Simple
    At 8:42 p.m., Dzhokhar Tsarnaev was taken into custody.

    At 8:58 p.m. Boston police released a statement on the department’s Twitter account saying, “The terror is over.”

    It’s not that simple, of course. On April 20, Steven Mey, 50, a computer repairman who lives in Watertown, went to the police department to request an application to apply for a firearms license.

    Mey said he was huddled in his home with his two children, ages 15 and 16, his wife and his mother-in-law.

    “I felt totally inadequate,” he said at the police station. “All I had was a baseball bat.”

    He added: “My wife thinks I’m crazy for doing this.”

  25. Anon E. Moose says:

    FirstTimer [24];

    My lender ‘charged’ me an application fee, but refunded it at closing — I never actually paid out of pocket for it. A wild speculation I had is that the credit at closing for a mythical fee never paid is used to mask and offset any increases in the GFE costs — that’s the metric they have to hold to. If they list the closing credit on the GFE, backing it out at closing won’t help them.

    P.S. – If they’re giving you a $4k credit, I have to wonder if you are getting the best rate.

  26. Comrade Nom Deplume, Bostonian says:

    [26] Brian

    He may get lucky and get his FID but only because it may get reported if he doesn’t.

    Many years ago, I lived around the corner from the now famous 67 Franklin. One night, some kids in a car chase with police turned into my driveway, thinking it was a street. I heard the commotion and went to the door. A Watertown cop told me to go back inside. My GF hid in the bathroom. I went elsewhere.

    I heard someone at my back door, then heard police yelling “freeze.” The door was locked and very secure but had someone tried to get in, they would have seen me pointing a rifle at them. I have my Mass FID.

  27. Comrade Nom Deplume, Bostonian says:

    Max Baucus retiring. Even if GOP doesn’t get Senate seat, they could get Montana gov seat.

  28. Painhrtz - Doc Daneeka says:

    Nom, since I own a .50 cal muzzleloader and the law makes no distinction technically my Hawken is now a weapon of mass destruction and I will be a criminal. I started looking at homes in Bozeman MT. I think I may start that consulting gig in the near future. Have to talk to the wife first but I don’t think she would mind. alternative is New Hampshire if we stay on the east coast. think i’ll go free stater. I’m done with the police state of NJ it is how I plan my escape that will be the hardest decision.

    this is just a rant by the way I’m sure I’ll still be stuck here in 5 years complaining about the same crap.

  29. Happy Renter says:

    [26] “I felt totally inadequate,” he said at the police station. “All I had was a baseball bat.”

    I don’t know what the laws are in Mass., but he should at least be able to obtain a long-gun for home defense with no problem. (Nothing says “go away” quite like a Mossy or a Remington.) If that’s an issue up in Mass., then that state is worse than I thought.

  30. Happy Renter says:

    [26] From the article: “The flood of misinformation became so bad on Friday that the ambassador of the Czech Republic to the U.S. said he felt the need to release a statement explaining that his country is different from Chechnya.”

    Looks like Paulie Walnuts is not the only one prone to making that mistake.

  31. raging bull jj says:

    Fixed Rate 10 Year 0 2.500% 2.675 %
    Fixed Rate 15 Year 0 2.500% 2.620 %
    Fixed Rate 20 Year 0 3.250% 3.373 %
    Fixed Rate 30 Year 0 3.375%

    It reall is crazy how low rates are, back in 2000 I paid 7.75%

  32. Brian says:

    The sporting goods store got a delivery of 20 guage Chinese made pardner pumps for like $200. Thinkin’ about it…..

    31.Happy Renter says:
    April 23, 2013 at 11:19 am
    [26] “I felt totally inadequate,” he said at the police station. “All I had was a baseball bat.”

    I don’t know what the laws are in Mass., but he should at least be able to obtain a long-gun for home defense with no problem. (Nothing says “go away” quite like a Mossy or a Remington.) If that’s an issue up in Mass., then that state is worse than I thought.

  33. Brian says:

    I remember people saying 5.5% was a really great deal.

    33.raging bull jj says:
    April 23, 2013 at 11:45 am
    Fixed Rate 10 Year 0 2.500% 2.675 %
    Fixed Rate 15 Year 0 2.500% 2.620 %
    Fixed Rate 20 Year 0 3.250% 3.373 %
    Fixed Rate 30 Year 0 3.375%

    It reall is crazy how low rates are, back in 2000 I paid 7.75%

  34. JJ says:

    Chinese made pardner pumps sound like something from a rub and tub place

  35. Brian says:

    No more dirtbag landlords renting to rowdy Section 8 drugees here. They’re getting a bit tired of it here.

    Disruptive persons ordinance

    The council also approved a draft of the disruptive persons ordinance, also known as the “good neighbor” ordinance, which holds landlords responsible for the actions of their tenants when it comes to quality-of-life issues such as alcohol or drug abuse and even loud parties which result in police action.

    The proposed ordinance, which will be formally presented to the council for its May 8 meeting, after two arrests of tenants within a 24-month period, the town could ask for a hearing and require the landlord to post a bond. A third incident within a specified time period results in another hearing at which the town could ask for some or all of the bail to be forfeited.

    Extenuating circumstances can be introduced to show the landlord is trying to conform.

    The ordinance goes with the property so arrests of separate people in separate incidents count as two strikes.

    The ordinance is modeled after laws first passed in several Jersey Shore towns as a way to control rowdy summer tenants.

    If formally introduced at the May 8 meeting, the council could hold a public hearing at the May 22 meeting and could approve the ordinance that night.

  36. Libtard in Union says:

    Where is here Brian?

  37. Brian says:

    Newton

  38. Comrade Nom Deplume, Bostonian says:

    [31] renter,

    It is an issue. I have an FID with no expiration but only because my dad was a cop.

  39. Comrade Nom Deplume, Bostonian says:

    [39] brian

    Newton doesn’t have laws like that already??? I guess they just relied on wealth to keep the riff-raff out of Waban.

  40. Brian says:

    38 – They’re trying to revive one of the main streets here where all the shops are (spring street) but one of the things I’ve felt that they’ve had working against them were all of the renters in that area. There seems to be a lot of turnover and the landlords will rent to anyone. I guess the town is finally tired of sending the cops to respond to fights, domestic disturbances, heroin deals, parties, and a shooting recently where some guy shot up a house with an AK-47 or whatever. I hope it works.

    http://www.nj.com/morris/index.ssf/2013/02/cops_denville_man_who_shot_new.html

  41. Brian says:

    42 – different Newton.

  42. Happy Renter says:

    [41] Nom — then things up there are even worse than I thought. Unbelievable.

  43. grim says:

    I started looking at homes in Bozeman MT. I think I may start that consulting gig in the near future

    Who? I know everyone in Bozeman.

  44. Painhrtz - Doc Daneeka says:

    Grim online search no realtors yet no offense but kind of tired of dealing with realtors until i’m ready. wife and i found a 54 acre 3 bed/bath cabin with its own water rights, backs up to BLM land, and is 30 minutes from the airport. If I pull in 3 quarters of what i am now we would live very well out there. She is also 45 minutes from great skiing. sure I can’t hunt pretty much half the year but would free me up for other pursuits. Like i said above not likely to happen but would love if we can make it work.

  45. JJ says:

    At Gay Realty Watch, we look for news to share with you about the gay real estate market – both lgbt real estate news and news specific to gay

    Really, how is their home buying different than other folk? Maybe Grim should change his name to Happy and pursue the gay market

  46. Comrade Nom Deplume, Bostonian says:

    [49] pain,

    Might I suggest a joint venture????

  47. Comrade Nom Deplume, Bostonian says:

    AP apparently got hacked or punked with press release about attack on WH causing market to mini-flashcrash.

  48. Comrade Nom Deplume, Bostonian says:

    [53] redux

    never mind. Juice on it.

  49. grim says:

    Grim online search no realtors yet no offense but kind of tired of dealing with realtors until i’m ready.

    I’m talking consulting.

  50. Painhrtz - Doc Daneeka says:

    Grim for what I do and my contacts it is just making a couple of calls to people who own their own firms to transistion until I can build steady business on my own. Right now I get contacted regularly for 6 month contracts it is a matter of getting 2 years of steady work lined up for me to make the jump.

    Nom any time but the water is all mine : ) your going to have to go with an illegal cistern.

  51. grim says:

    Ah ok, I know a large IT employer in Boz who has a consultancy practice stationed there, so I was wondering if it was the same place.

  52. JJ says:

    Hey I am closing on my condo soon. I cant figure out what fees I have to pay.

    Seller owns condo outright no mortgage, I am buying condo cash no mortgages.

    Seller pays NYS RE transfer tax and realtor fee.

    I pay my lawyer and title search and title insurance. But I am sure there might be some other stuff. But so far it appears I just pay for condo and the lawyer and title thing, anything else I have to pay

  53. BearsFan says:

    16 sorry Joyce, i did not.

  54. Brian says:

    Chip = douche

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