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Ever waited by your phone for hours waiting for that exact minute when you could buy tickets to a concert for you favorite artist?  Your phone is programmed with the number of the box office so you could just hit redial when the clock struck the proverbial, high noon  - - you were prepared to get the best seats?  Then it's time - you hit redial - you get the box office and all the really good tickets are gone - cause a corporate entity with pull and lots of money robo-d all the best seats so they could resell them.  Pissed you off right?

Well, a similar thing is happening now in the real estate markets.  A scam that leads me to mistrust any statements made in the press about the current state of the real estate market.  Most people have never heard of this - so let me build you the story below the squiggle.

I was driving to work one day when I heard a radio news blurb about how the commercial real estate investors were snatching up all the foreclosure properties in Arizona.  That sat in the back of my mind as I pondered what that meant to the normal regular buyer - looking for a home.  I thought about the statement in the news broadcast that the commercial investors were buying the houses so they could "rent them out" and then sell them later at a price higher than they purchased the property for.

An article posted  noted the following items:

Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out.

Now, investment companies like the Blackstone Group have swooped in, buying thousands of houses

Joe Cusumano, a real estate agent in Riverside County, Calif., said that in recent months 90 percent of his business had been for companies like Invitation Homes, a Blackstone subsidiary.

90% of his business!
Where does that leave the typical homebuyer?  With a 10% chance - cause these investment companies have an advantage in the market that typical homebuyers do not have.
"ordinary buyers are feeling squeezed out".
In fact, private equity alternative investment firm Blackstone Group LP (NYSE: BX) is now the nation's largest owner of single-family homes. Founding partner Stephen Schwarzman recently said the firm is spending $100 million a week buying homes.
$100 million - per week
"the nation's largest owner of single-family homes."
In a wide-ranging conversation, Steve Schwarzman, Blackstone Group chairman & CEO, discusses his company's pledge to support innovation and weighs in on Dell's LBO, the private equity space, and the outlook on the market.

"Blackstone is now the largest owner of individual houses in the United States," Schwarzman told CNBC's "Squawk on the Street" Monday, pointing to his company's $3 billion portfolio of residential real estate.

Residential property - not owned by owner occupants - but controlled by Wall Street.
The very Wall Streeters who don't care about anyone except themselves.
Fix the Debt financier Peter G. Peterson knows a thing or two about debt: he’s an expert at creating it. Peterson founded the private equity firm Blackstone Group in 1985 with Stephen Schwarzman (who compared raising taxes to “when Hitler invaded Poland”). Private equity firms don’t contribute much to the economy; they don’t make cars or milk the cows. Too frequently, they buy firms to loot them.
And now they are buying up America's residential market.

The phenomena seems to be evolving into something that is really nasty for the typical home buyer and is a god send to the large investment companies - a kinda robo-d ponzi scheme type real estate market - controlled by the bankers and Wall Street.

What has morphed is a collusion between foreclosure bankers and real estate investment companies (and real estate agents) that leaves the typical home buyer - without the purchase they want - having been screwed by big business and the banks.

The bankers and the investment firms screwed the US during the housing bubble - that ended in a lot of people losing their homes.
Now the bankers and the investment firms are in collusion again to stop people from even being able to buy a home (more on that in a minute).

Flopping

In 'flopping,' a home is purchased by insiders at a steep discount, then immediately sold for a big profit.
" at a steep discount"
But the resale doesn't necessarily happen right away - they can and will buy the home and rent it out first and then boot the renters out when the market price of the house increases.

A realtor referred to this practice as

"It's just robbery," she says. "And I don't know how to stop the robbery."
This after clients of hers made an offer higher than the asking price and lost the purchase - BUT the house sold for WAY less to an investor - $40,000 less than her clients had offered.
When she asked the listing agent why, she was told to "leave it alone."
"leave it alone."
We can't afford to do that!

This is literally stealing - but they very seldom get caught or prosecuted.
Which is becoming the norm for big banks and Wall Street.

Let's look at it again from another perspective:

flopping involves selling an asset at less than market price (to a friendly party, of course) and then reselling it to market
"less than market price (to a friendly party, of course)"
Of course
Now, of course, we have to pay the price. A study released this spring by CoreLogic, a market research firm, estimates the cost of flopping will exceed $375 million this year, up 20 percent from 2010.
Both of those articles focused on short sales - but as I said earlier - this type of dealing may have evolved into something much more expansive.

And it's no longer limited to just a few cities - or depressed properties.
And it's not just about resale.

From an article in the Charlotte Observer - Charlotte’s Wall Street landlords move quickly to evict renters

Combined, their purchases have made Charlotte the second-busiest market in the country among single-family home investors. Over the summer, one in every five Charlotte-area homes sold was bought by an investment group.
One in five!
"It's abuse what these companies are doing around Charlotte," she said. "They only want the money, and that's it."
It is all about corporate greed.
"They have investors who want to see a rate of return," Gosser said.
Wall Street - buying up the residential market at bargain prices to turn it around and sell it at a higher price - either right away  - or after they have rented it out.

Some might call this just plain old capitalism.
But when the market is rigged so that Wall Street and the Big Banks are the winners - it's not capitalism - it's cronyism.

This wall street/big bank practice does affect people who are the typical homebuyer - trying to buy a home in today's market.  

Now the typical homebuyer not only has to compete with other typical homebuyers for a property, but they have to deal with an insider collusion of bankers and investment firms that have now turned residential properties for corporate profit - again.

Lets look at what this looks like based on the true experience of a typical homebuyer I know:

This was the third time that this is happened to me - but, it is the first time that I have pushed my realtor to take it to what is now the final, predictable conclusion.

Every day, repeat every day - I keep 3 realty webpages open - I check them  >>every 15 minutes<<  for new listings or new price changes.  I have been doing this now for three months.  I am currently renting a room from a friend, as I have not been able to purchase a new home yet.  I would venture that no one in the Metro area is following the real estate market as closely as I am - except investors.

The problem I have encountered is:
    A property listing will post with a dramatic change in the asking price.
    I will immediately contact my realtor and tell him I want to see the property.
The first two times this happened - my realtor called me back and told me he had spoke to the listing realtor and they already had multiple offers  (usually less than 1/2 hr after the price change posted on the web page, less than 1/2 hour).  The first two times I let it go and did not pursue it.

Yesterday - the same thing happened.   A property posted with a  >50% reduction in price< .  I  immediately contacted my realtor and told him I wanted to see the property.  Fifteen minutes later he sent me this email  "I spoke with the agent and the price is correct.  He has already received an offer."  Fifteen minutes - to an OFFER!

This time - I pushed back, telling my realtor that the listing agent can entertain more than one offer, and I want to see the property as soon as possible.  We inspected the property 3 hours later, I made a FULL PRICE OFFER-CASH, and told my realtor that I was willing to increase my offering price.  Within hours, I received a call from my realtor telling me that the listing agent had received multiple offers and I would not be getting the house.  I was not given the option to counter any offer the listing agent had - I was just told I wouldn't be getting the house.  I am convinced that the property was already committed to another buyer >at a 50% discount< before I even set foot on the property.  They had no intention of selling this home to anyone but an investment company.

Someone got a hell of a deal, 50% off - and I'll bet it wasn't a citizen, it was a corporation.

Someone got a hell of a deal, 50% off -  it was probably a corporation.
"leave it alone."
"It's just robbery," she says. "And I don't know how to stop the robbery."
"It's abuse what these companies are doing around Charlotte," she said. "They only want the money, and that's it."
It is all about corporate greed.
"They have investors who want to see a rate of return," Gosser said.
The collusion of bankers and investment firms
- stealing what's left of the American Dream.
Because
"They have investors who want to see a rate of return," Gosser said.
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  •  I Wonder if Some of That Hit Us here in N Ohio (63+ / 0-)

    Due to working in the home, we could not list our house for sale till we bought the new house and moved out.

    But just before we went on the market with the old house, in August of all times of year, there was a flood of 30-40 more comparable properties for sale here and nearby. It will cost us at least another 10% over the losses we already calculated into the price, probably finishing off our working savings.

    Ordinary humans don't rush to sell houses in August, makes me think some banks or other financial gamers are up to something.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Thu Nov 14, 2013 at 06:59:43 AM PST

  •  Who is going to make them stop? (42+ / 0-)

    Holder?

    HaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHa

    •  When no one buys the houses for double? (41+ / 0-)
      "They have investors who want to see a rate of return," Gosser said..
      That right there is the limit.  The investors want to buy low and sell high.  They've done the buy low part.  But now, who are they going to sell to?  If the houses would have sold for double, they wouldn't have sold for half.

      So now the investors have the houses.  But now what?  Sell them high to who?  Rent them out to who?

      And remember, these are traders who want to just push dollars around, or maybe bulk commodities that are fungible.  But real estate is not. It's fixed on a plot of land, and is constantly depreciating.  Do they want to be responsible for leaking roofs, broken windows, cracked pipes?  And the property taxes?

      Also, one of my neighboring burbs that was hit hard by forclosures, with lots of rentals, is putting in a ton of new renting regulations.  Fees plus annual inspections.  The investor class doesn't like to do real work, and that's what real estate is.

      They're not going to get the rate of return they want, and soon the investors will all want their principal back.  

      •  Luv the part about regulations on rentals (20+ / 0-)

        bet Wall Street didn't anticipate that and it makes all the sense in the world

        - would be great is all communities started setting regs for rented single-family homes, since it's a relatively new rental market - there probably aren't a lot of communities that haven't focused on that rental market yet.  

        I would also think - there's a large % of the population who do not realize that the people next door are renting that house.

      •  They'll figure out a way to bring (14+ / 0-)

        back subprime lending - in another form - when they want to unload all the properties. These guys don't lose

        Join Las Vegas NV Kossacks ~ Doubt kills more dreams than failure ever will

        by miracle11 on Thu Nov 14, 2013 at 09:49:03 AM PST

        [ Parent ]

        •  "Rent to Own," (4+ / 0-)
          Recommended by:
          MNDem999, karmsy, BusyinCA, OleHippieChick

          sounds like a good one. People with "bad" credit who want to buy a house are the marks in this swindle, just like they were with the sub-prime mortgages.  

          Bunch of fucking sharks, thats what they are.

          Could local ordinances be put in place to prohibit these kinds of sales?

          "YOPP!" --Horton Hears a Who

          by Reepicheep on Thu Nov 14, 2013 at 04:08:57 PM PST

          [ Parent ]

          •  . (1+ / 0-)
            Recommended by:
            Reepicheep

            "Could local ordinances be put in place to prohibit these kinds of sales?"

            that would presume that the local politicians aren't in on  the scam.

            "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

            by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 05:57:31 PM PST

            [ Parent ]

          •  Oh just like The Jungle. (3+ / 0-)
            Recommended by:
            BusyinCA, OleHippieChick, Reepicheep

            Seriously. The family home was rent-to-own. They got kicked out and lost everything they paid in because you get equity in a mortgage and nothing but another month off the payment terms in rent-to-own. No mercy.

            One member of the family was away when it happened and came back to another family already moved in and rent-to-own financing the place.

      •  This is interesting because here in Fitzwalkerstan (12+ / 0-)

        they relaxed the rules on landlords and are pushing hard to reduce property taxes.

      •  They're fixing the market (13+ / 0-)

        so that people have to pay double what they otherwise would. People need a place to live and they have to pay for it. These corporations use that to manipulate the market so as to raise prices to levels they wouldn't otherwise be at. I have to wonder what percentage of income is going to housing at this point, and how much it has risen in the past few year.

        Really, this is artificially propping up housing prices as well. This will lead to another crash. I wouldn't be surprised if these were automated programs doing the decision making. If they control enough of the market they will get the rate of return they want, for a while at least.

      •  You make money slowly in realestate (14+ / 0-)

        As I sit in my currently vacant (Except for me)two flat I cannot see how this is going to work out well for corporate America.  If you want to make money off rental property you have to take care of it, you can't just fill it and wait for the riches you think you deserve to fill your pockets.  If you get poor tenants or if you don't care for your buildings they will get destroyed and any investment will pretty much disappear.  The only people who will buy these "flopped" properties are bottom feeders or people who plan on bulldozing the property to build something new.  Real estate had always been a safe investment because it took work and the profits were small, I don't think we'll ever see a time where property values are jumping at 10-20% a year and unless they do "Flopping" is bad business.

        BTW, the rental rules in Chicago are brutal and being a landlord is hard work.  Good luck managing your buildings from your hedge fund in NYC.  I'm sure the apartments will be loaded with deadbeats that will screw you out of six months rent before you get evicted and when you do pry them out of your neglected property they will do you the favor of removing the plumbing and wires so your re-modeler won't have to remove them.  Then when you figure out that it costs you 20K to fix the damage done to the property every time you rent you'll figure out this is not the business for you.

        •  Making the money in real estate is not the goal (9+ / 0-)

          The diarist has neglected the actual end game.  The goal is to buy a lot of properties.  Show a lot of revenue and some profit and a lot of assets that may or may not appreciate.  Then, go public.  That gets the hedge fund investors money back.

          At which point all the issues with trying to run a single family rental empire will likely bring the company down in some way.  Shareholders will be wiped out.  Debtholders will be paid pennies on the dollar, and the properties will hit the market all at once causing a chain reaction of ending the rest of the companies as their primary assets drop in value.

          I expect what we have is the set up for the next big crash and depression and bail outs of the .1%.

          •  Wash, rinse, repeat (1+ / 0-)
            Recommended by:
            Chi

            After the prices crash then the original people, who were the same folks who brought us the sub-prime crisis, will reinvest and start the whole thing again. And people will fall for it again.

          •  the (1+ / 0-)
            Recommended by:
            Cordyc

            hedge funds will sell the crap to pension fund managers as pension funds keep looking for better rates of return because low interest rates are destroying the funds, then the pension fund managers go take a job at the hedge fund as an 'adviser' and walk off with a cool $3.5 million in 'by proxy' bribe money and the pension fund blows up later on.

            "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

            by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 06:04:02 PM PST

            [ Parent ]

        •  Some sort of game with property depreciation (2+ / 0-)
          Recommended by:
          Cordyc, Just Bob

          as a tax shelter...

          That's the only way I can see for it to make the kind of return the Rmoneys of the world want.

          Nothing in the world is more dangerous than a sincere ignorance and conscientious stupidity. Martin Luther King, Jr.

          by maybeeso in michigan on Thu Nov 14, 2013 at 07:30:02 PM PST

          [ Parent ]

        •  I agree (0+ / 0-)

          Small time landlords have a lot of advantages over these huge funds.

          That being said, while I don't think property prices will go up 10-20% per year reliably going forward, the fact is they have been for the past year or two.  

          The Fed really needs to pull the plug on QE before they build another bubble.  The speculation with easy money is already getting out of control.  It's also questionable how much QE is actually stimulating the economy at this point.  

        •  Corporations can hire or buy (1+ / 0-)
          Recommended by:
          PeteZerria

          property management companies for that.  What I don't understand is that when a corporation is able to purchase at a 50% discount though a buyer is willing to pay full price, the previous owner loses real money, and who in their right mind would do that?

          I have seen listings go down in price that were last sold at the height of the market in 2005 or 2007, that makes sense to me.  They were overpriced to begin with.  I've also seen in the listings where realtors have purchased them cheaply after the crash, when it was hard for people to even get a loan.  That makes sense too.  Then they had the properties fixed up, and put them on the market for double what they bought them for.  That also makes sense, but selling to the low offer doesn't make sense.

      •  Norm - if you do this on a large scale (9+ / 0-)

        you can hire a property manager or form you own property management subsidiary. The model works if they can find tenants that provide a reasonable cash flow until the markets improve. The institutional buyers can also mortgage the properties as some point, and take some of their cash off the table. This strategy seems to only work with institutional sellers like banks. An individual selling a home themselves, or with a broker, would always allow all legitimate offers to come to the table and would try to facilitate a bidding war.

        "let's talk about that"

        by VClib on Thu Nov 14, 2013 at 12:39:11 PM PST

        [ Parent ]

        •  And if they have enough of the market (7+ / 0-)

          they will drive the rents up. These are large investors we're talking about so I'd expect some level of collusion to drive up rent prices as well as home prices.

          •  It's very difficult to control rental prices (5+ / 0-)

            In major US markets, without any rent controls, the market for rentals tends to be one of the most efficient and free markets in the US. It's nearly impossible for someone to control enough of the rental market to extract what economists would call "monopoly rents". In addition to renting single family homes people can rent apartments or buy a home if the economics are more favorable. High rents also bring new supply into the rental market, although that is typically new apartments. It's certainly true that institutional owners would be more aggressive in raising rents than a typical individual owner, but only if the market will support higher rents.

            "let's talk about that"

            by VClib on Thu Nov 14, 2013 at 01:46:25 PM PST

            [ Parent ]

            •  It's historically difficult to control rental (1+ / 0-)
              Recommended by:
              ManhattanMan

              prices, because historically a handful of gigantic corporations haven't held an enormous share of the available supply.

              And by the way, if you're going to claim "efficiency", it might be good to explain what you mean by that word. I doubt that residential rental markets are particularly "efficient" by any metric I would recognize. Contrary to ancient dogma free markets are, generally speaking, spectacularly inefficient.

              To put the torture behind us is, inevitably, to put it in front of us.

              by UntimelyRippd on Thu Nov 14, 2013 at 02:08:58 PM PST

              [ Parent ]

              •  UR - by efficient I mean enough buyers and (1+ / 0-)
                Recommended by:
                ManhattanMan

                sellers that the market clearing price cannot be controlled by any one party. If we have hundreds of owners who make available thousands of rental units (homes and apartments) and thousands of renters, the market will seek equilibrium through a market clearing price. That's an efficient market.

                "let's talk about that"

                by VClib on Thu Nov 14, 2013 at 02:29:31 PM PST

                [ Parent ]

                •  Meaning it is efficient in determining (1+ / 0-)
                  Recommended by:
                  mkor7

                  the "correct" price for rent based on a free market. I find this claim suspect. Do you have anything to back it up? It sounds like a standard line from an economist based on the idea that the market will determine worth and the rental market is somehow less immune to collusion, but I think it depends very much on where you live.

                  •  You can't collude... (0+ / 0-)

                    ...in the rental market because rentals can't be stockpiled.

                    If my unit is empty for December 2013, then that rent is forever gone. I will keep lowering the rent until I get a tenant because even $1 is better than nothing.

                    (This is why airline seats are discounted and why airlines generally lose money).

                    But you can stockpile houses and influence the market for sales. That's where they will stick the blade in.

                    •  You can collude in the rental market (0+ / 0-)

                      You keep a certain number of houses off the market and it raises the rents. If these investment companies are going through property management companies then it's likely that there is some level of inevitable collusion happening. They will stick the blade in both spots. They hold houses of the sales market and that increases the number of renters which drives up rents, combined with keeping stock empty for renting.

                      If my unit is empty for December 2013, then that rent is forever gone. I will keep lowering the rent until I get a tenant because even $1 is better than nothing.
                      Sure, but you're small scale, relatively. We're talking about places where large investors own up to 10% or more of the market. And when it's an already impacted market that means big money. The stockpiling houses is not separate from the high rents.
                      •  It would be stupid to do that (0+ / 0-)

                        These guys don't have the scale to push rents up like that.  Even if they own a lot of properties it's still only a small fraction of those available.  Additionally, not every investment group is going to collude.  If some idiots try to hold their supply off the market, someone else will be more than happy to take advantage of the increase in rents offered, while the idiots sit there not making money on their vacant supply.  

                        Even owning 10% of the properties is not enough to control rental prices.  Sure, maybe if they just leave all their properties vacant it would have an effect, but it wouldn't benefit them.  Leaving half their properties vacant wouldn't double the rents in the other 5%, so they'd still be losing money.  And that's if a single investor owned 10%.  If it's several different large investors there's no chance they'd agree to that dumbass strategy.  

                        The bottom line is there are plenty of real problems with Wall Street investors buying properties, without fabricating ones like them colluding to control rents.  

                        •  If they bought them on the cheap it would (0+ / 0-)

                          benefit them. And it's good to remember that the rental market is largely neighborhood by neighborhood, so when a neighborhood has high foreclosure rates a company can drive up the prices and kick out the "less desirables" as part of gentrification. This has been happening again and again in the Bay. Of course, it isn't simple collusion, they get the city on board as well. This is why SF has ended up like it is, a crap place to live for anyone who isn't super-wealthy.

                          •  Have you done the math? (0+ / 0-)

                            It doesn't matter how cheap the houses were. That is beside the point. The cost of a production (in this case buying the home) has little to do with sale price (in this case rent).

                            Can you appreciate how many homes they would have to keep unrented in order to affect the market? I mean, even if you give them an astronimcal marketshare, say they hold 20% of all rentals in a market (and they almost certainly do not), even if they kept a full 50% unrented, that's still just 10% of the rental market. And to what end? They would have to put enough upward pressure on rents to double them in order to make up for the 50% they are not renting. Not to mention, a vacant home requires maintenance on their dime.

                            I'm sorry, but there is way too much fear of big, bad business in this story and comments, and too little actual critical thinking.

                            Oh, not to mention, RE prices are based on comps. If these houses were being bought en-masse below market rate, it would depress prices. Even if they are "holding them off the market." The reason is very simple: Appraisers work off comps. Every below market sale makes a below market comp. Banks will not lend more than the appraised value. This whole story is BS. Yes, you have investors buying in a depressed investment class. No, that is not necessarily an evil plot.

                    •  You have no idea what you are talking about. (0+ / 0-)

                      To put the torture behind us is, inevitably, to put it in front of us.

                      by UntimelyRippd on Fri Nov 15, 2013 at 06:51:55 AM PST

                      [ Parent ]

                •  And what justifies appropriating the word (4+ / 0-)
                  Recommended by:
                  VClib, AoT, nota bene, Just Bob

                  "efficient" to mean that?

                  I mean -- I understand that this is favored technical usage, but it is extremely problematic, because it means something very, very different from what people generally mean by "efficient" -- which is that the system is not lossy in terms of the "energy" that goes into it.

                  For example, every time a home changes hands in the "usual" way -- involving a realtor, a lender, a private seller, a private buyer, and a miscellaneous assortment of functionaries -- somewhere between 7 and 10% of the home's financial value is skimmed off. If the system were "efficient", that number would be more like 1%.

                  To put the torture behind us is, inevitably, to put it in front of us.

                  by UntimelyRippd on Thu Nov 14, 2013 at 02:50:15 PM PST

                  [ Parent ]

                  •  UR - point well made (0+ / 0-)

                    The market for buying and selling houses as you note isn't very efficient because of all the participants. I think the market for rentals is more efficient because there are typically only two parties so the transaction costs are lower. Plus the internet is helping a lot on the rental side.

                    I was using the term efficient to suggest that a market clearing price is quickly determined.

                    "let's talk about that"

                    by VClib on Thu Nov 14, 2013 at 03:06:44 PM PST

                    [ Parent ]

                    •  Is there a market clearing price with housing in (2+ / 0-)
                      Recommended by:
                      WheninRome, Just Bob

                      a tight and ever tightening economic situation? This, like water, food and healthcare seems to me not only a captive market, but a naturally extortive market if not properly regulated.

                      Could this be the beginning of Mega Corps and the complete corporate infiltration of our life? Am I going to be living in the Pajama Factory... sponsored by Carls Jr or some kind of private housing unit or system?

                      This is starting to feel like a corporate dystopia story:

                      ... and when Blackstone bought the last of the houses, it was all over. Three companies owned every home in town.

                      You either worked for the Authority or you didn't get a roof over your head.

                      A bunch of us gathered out on the docks, but then the Authority rolled in a cleared us out a few months ago. It was an Xe unit and they were particularly nasty.

                      They did their call to action thing, "Work for us and you and your family will have a roof over your head and food on your table..." but we had been through the drill before, and none of us were buying that plastic comfort shit they were peddling. things got heavy... we were "relocated".

                      I'm not a fan of business being the only metric and meaning for society. It's super dangerous, especially right now when we have billions of people. This means that people are cheap and have little value.

                      Add to it that human resources is a cost and business as national and global ethos is a fairly terrifying proposition.

                      This shit creeps me out.

                      Democracy - 1 person 1 vote. Free Markets - More dollars more power.

                      by k9disc on Thu Nov 14, 2013 at 11:09:47 PM PST

                      [ Parent ]

                    •  I agree with you somewhat -- and I thank you (0+ / 0-)

                      for having taken the moment to jot down that succinct definition of "efficiency", as it is used in the technical jargon of microeconomic theorists.

                      As it happens, I think microeconomic theorists live and work in an epistemological fantasyland, divorced from such human realities as ethics, suffering, purpose, control, etc.

                      Ignoring nonetheless every human concern other than efficient production of something or other, market competition is always inefficient -- sometimes spectacularly so -- when efficiency takes on its common meaning: The ratio of what you get out versus what you put in. The two most dramatic sources of inefficiency in market-based competition are:

                      A. Duplication of effort
                      B. Cost of marketing.

                      The theorists, of course, simply wish away item B, even though it represents an enormous economic inefficiency. Every nickel's worth of energy and labor spent on advertising, on "brand management", on promotions, on celebrity endorsements, is a nickel that contributes nothing positive to society, and indeed, often degrades something of substantial value.

                      The entire edifice of microeconomic theory rests on a foundation so cracked and porous that the edifice itself is riddled with black mold and permeated with radon gas: The lunatic concept of goods being indistinguishable, which leads inevitably to a market price that is equal to marginal cost (except it wouldn't), with "normal" profit built into the price. The problem is, the average entrepreneur isn't the least bit interested in "normal" profit; nor, for that matter, is the average Fortune 500 executive. Thus, the insane application of some of our most creative thinkers to the inane problem, not of satisfying some human want, broad or specific, but of satisfying the employers' need to earn a monopolistic profit for the most ordinary of commodities. This is done, of course, by psychologically manipulating the consumerate into believing that Lululemon's yoga pants, which probably cost about $3 to actually manufacture and transport to market, have a value of $100 a pair.

                      What is interesting about the real estate sales market is that these inefficiencies are less hidden than in most markets. A pair of realtors (listing agent and selling agent) will divvy up 12 thousand dollars between them, should they successfully mastermind the transfer of a $200,000 home. Twelve thousand dollars! That's the equivalent of 3 months gross income for a typical household -- or let's say, 2 months gross cost of employment for the wage earners of a typical household. How many hours do you think either of those realtors will actually invest in the sale of any particular house? If between the two of them they have 40 hours in, I'll eat my shirt.

                      So why is their commission so high? I mean -- they do okay, income-wise (some of them, of course, make 3 or 4 times what I make, despite the fact that I have 3 times the investment in education, and that it is doubtful that 1 realtor in a 100 could ever learn to do what I do); but they aren't all living in million-dollar palaces and driving bentleys. So where does all the money go, that comes in via their commissions?

                      The answer is that it goes to self-promotion. A large fraction of the gross income to a realty office goes back out the door, not to sell houses, but to sell the realtors. That is in fact a realtor's primary occupation. And markets being what they are (I mean, other than excruciatingly imperfect), the realtor market will drive itself to some sort of pseudo-equilibrium in which the expense of self-promotion returns just enough actual business -- which is to say, employment in something that is of any use to anybody -- to justify being in business as a realtor. This isn't the fault of realtors, and it doesn't make them bad people; nor in my experience, does it make them lazy people. The market, however, functions so as to direct most of their time to utterly non-productive work.

                      There are similar inefficiencies in the rentals market -- the expenses of marketing your "unique" condos or apartments in order to attract the target demographic. And in a market as broken as the current one (where many houses are for rent because the owner cannot sell them), the flat rate paid to an agency for successfully renting a place appears to be 1 month's rent: 8.5%.

                      To put the torture behind us is, inevitably, to put it in front of us.

                      by UntimelyRippd on Sat Nov 16, 2013 at 07:48:13 AM PST

                      [ Parent ]

        •  They all hire property managers. Not cheap n/t (0+ / 0-)
      •  each other (3+ / 0-)
        Recommended by:
        MNDem999, Cassandra Waites, AnnCetera
        But now, who are they going to sell to?
        Market churn, baby. The whole derivatives debacle was based on these corps selling mortgages turned into many-times-removed abstract gibberish back and forth to each other, as far as anybody can tell. It's not like Joe Q Public was in on the default swaps market....

        Nothing says "we care" like a Tomahawk missile strike.

        by nota bene on Thu Nov 14, 2013 at 05:03:37 PM PST

        [ Parent ]

      •  I don't think they're really buying low (0+ / 0-)

        Maybe there are some shady transactions like this, but the tsunami of investment money flooding the market has already pushed prices up by 25%.  

        I went heavily into real estate toward the end of 2011 and managed to complete my purchases by the middle of 2012.  After that all the big money started flowing in.  

        These guys are getting "OK" deals, but nothing great like what I got.  It's an advantage sometimes to not have tens or hundreds of millions of dollars to put to work.  

        My personal opinion is that these investments will not prove to be as profitable as they are hoping they will be.  

    •  What law are they breaking? (1+ / 0-)
      Recommended by:
      jan4insight

      It looks shady to me, but I'm not aware of anything that would make it illegal. I'm no lawyer, though, so I can't say for certain. Any law-talking types out there who can provide any insight?

      "When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist." --Dom Helder Camara, archbishop of Recife

      by JamesGG on Thu Nov 14, 2013 at 10:54:51 AM PST

      [ Parent ]

      •  Accounting Control Fraud... (2+ / 0-)
        Recommended by:
        spacecadet1, Caniac41

        The companies will not make money in the long run.  They will attempt to look profitable long enough to go public at which point the hedgies have their money back and the losses will be dumped on the new shareholders and debt holders.

  •  this sounds just like the Twitter IPO last week (51+ / 0-)

    steep discounts the night before to institutional investors, who sold the next morning at huge profits to the general public.

    NPR interviewed someone about the IPO process, who was pretty clear that they do this on purpose to "do a favor" for the institutional investors that they rely on.

    Fraud.

  •  Wait, what are we upset about? (5+ / 0-)
    Recommended by:
    Deep Texan, Involuntary Exile, TomP, FG, Loge

    That housing values are being driven up?

    I guess we're upset there are houses for sale that aren't really for sale to the general public?  That's perfectly legal.  Nothing requires you to sell to the highest bidder.

    •  We're upset because it isn't the right thing to do (44+ / 0-)

      Something about ethics, goodwill, and a functioning society.

      "Societies strain harder and harder to sustain the decadent opulence of the ruling class, even as it destroys the foundations of productivity and wealth." — Chris Hedges

      by Crider on Thu Nov 14, 2013 at 08:04:40 AM PST

      [ Parent ]

      •  Concerns are warranted, but process is reasonable (2+ / 0-)
        Recommended by:
        David Jarman, VClib

        This is not a conspiracy or anything "wrong".  

        Now, I understand the concerns raised in the diary and comments - the concerns are all legitimate.  Really, yes, I get it and agree on many counts.

        However: we have to deal with reality - this situation is no different from any other sale process where bulk sales are done in wholesale to retailers, and then the retailer turns around and sells the individual products to consumers.  

        Banks are NOT in the real estate business, and don't want to be and don't know how to be - what will they do with reams of properties (some of them underwater)??  

        Banks aren't property managers, brokers, or house sellers. Banks are not going to hire the personnel or go through the brain damage to do one-at-a-time sales of hundreds and thousands of houses.  So, sell em' off in bulk to a known quantity who is trustworthy to close the deal with no hassles, give the bank a single shot of "better 'n nothing" cash for these noose residential portfolios, and move on.

        All the concerns about predatory owners, financing advantages, and the specter of a new sort of American residential home market -- they're real, and concerning ... but nothing dark is happening here.  It's a political and economic issue, not a conspiracy.

        •  nothing (2+ / 0-)
          Recommended by:
          MNDem999, freesia
          what will they do with reams of properties (some of them underwater)??  
          They do nothing. The houses rot. Everyone reading this knows where there's a neighborhood like this in their general vicinity. There's no profit margin in replacing the roof of a home that nobody lives in except squatters.

          Same thing goes for commercial property too. Everybody reading this has seen entire strip malls sitting vacant for years at a stretch. Human beings--real entrepreneurs--could do something with that resource. Instead it's a tax write-off for the bank. One person's "depreciation" is another person's urban blight.

          Nothing says "we care" like a Tomahawk missile strike.

          by nota bene on Thu Nov 14, 2013 at 04:50:28 PM PST

          [ Parent ]

          •  I don't think that's right about strip malls... (0+ / 0-)

            The reason strip malls are empty is because retail real estate is absolutely brutal.  Too many of these properties have been built, and those in less than prime locations may simply not be able to be fully rented.  They can't lower the rents low enough on the vacant units to get people in, because if they do they have to cut the rent of everyone else.  

            I've watched as store fronts stay vacant literally for years.  It's just part of how retail real estate works.

    •  Legitimate buyers get squeezed... (28+ / 0-)

      ...out of the market.  This has happened quite frequently in the Inland Empire in California.

      "Life is the crummiest book I ever read - there isn't a hook, just a lot of cheap shots, pictures to shock, and characters an amateur would never dream up." - Bad Religion

      by TheOrchid on Thu Nov 14, 2013 at 08:11:24 AM PST

      [ Parent ]

    •  Not always (37+ / 0-)

      There seems to be a multitude of predatory practices going on here.  See Gooserock's comment above.

      When institutional investors control large blocs of real estate markets, they use their inventory in numerous ways to manipulate pricing, supply, etc.  It undermines real competition.  Sometimes those investors may want to see prices in an area rise and sometimes they may want to artificially manipulate them to go lower - depends on whether they're buying or selling at that moment.

      Either way, its artificial manipulation of prices and supply of real estate meant to benefit large corporations.

      If cutting Social Security & Medicare benefits for low income seniors is what Democrats do after they win a budget standoff, I'd hate to see what they do after they lose one.

      by Betty Pinson on Thu Nov 14, 2013 at 08:18:32 AM PST

      [ Parent ]

      •  They must be doing that within bundles. (0+ / 0-)

        Home ownership transfers are public record, how are prices not dropping if they are buying them at huge discounts?  

        I suppose if you buy a huge bundle you inflate the ones in neighborhoods where you want them to go up and deflate where you will be buying more.   As long as it evens out you wouldn't care.

        The other alternative would be kick backs where it hits the record artificially high but the bank repays them some other way for the difference.  Seller paid closing costs did a bit that in the bust to keep prices artificially high, good for commissions too.

        •  These investors are buying with cash and that is (1+ / 0-)
          Recommended by:
          Ted Hitler

          what the banks want.   I had looked at several properties that the bank would not even let me bid on.  I finally purchased from a family that did not want to sell to investors so I was lucky.  Even the regular investor is losing out to these big companies.   They are driving the prices up very quickly in many premium area's.

    •  Wait, what are we defending here ? (7+ / 0-)

           And what does legality have to do with it ?

      The free market is not the solution, the free market is the problem.

      by Azazello on Thu Nov 14, 2013 at 08:30:57 AM PST

      [ Parent ]

    •  I don't get it (8+ / 0-)

      Why are people selling their houses at 50% off to investors?

      [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

      by rabel on Thu Nov 14, 2013 at 08:45:43 AM PST

      [ Parent ]

      •  It's not "people" selling. Bank-owned properties. (12+ / 0-)

        Now, why are banks selling homes at steep discounts?

        I don't know.

        Art is the handmaid of human good.

        by joe from Lowell on Thu Nov 14, 2013 at 09:14:41 AM PST

        [ Parent ]

        •  Perhaps they get someone else to pay difference? (0+ / 0-)

          Is the foreclosed homeowner still on the hook for the original mortgage costs in non-recourse states (or if you've refi'd)?

          --
          Make sure everyone's vote counts: Verified Voting

          by sacrelicious on Thu Nov 14, 2013 at 12:06:44 PM PST

          [ Parent ]

          •  Once foreclosure is final, no more recourse, (0+ / 0-)

            presuming the homeowner financed with a standard non-recourse loan, which is the only kind of residential mortgage I've ever seen, and I've seen hundreds of them. I can't imagine a real estate attorney allowing her client to accept anything other than a non-recourse loan. If full recourse mortgages exist, the people who took them were either fools or desperate.

            So in answer to your question, once the mortgage lender has foreclosed the borrower's obligation to the lender is over, done. Is it possible somebody else could owe the lender? Yes. If the mortgage was subject to mortgage insurance, private or government issued, for the portion of the loan greater than a specified loan-to-value ratio, usually 80%, then the mortgage insurer might have to pony up something depending on how much of the loan had been paid prior to foreclosure.

            "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

            by Involuntary Exile on Thu Nov 14, 2013 at 02:38:18 PM PST

            [ Parent ]

            •  In some states I believe that the homeowner (3+ / 0-)

              will end up with a recourse loan if they refinance. I know that non-recourse is the law for initial loans in CA but normally refis are recourse.

              •  I've never had a recourse loan and I've refinanced (1+ / 0-)
                Recommended by:
                AoT

                multiple times in Illinois, Iowa, and most recently this past February in Nebraska. There's no way in hell I'd ever accept a recourse mortgage on a re-fi. Period. Anyone who does is a fool. Especially when lenders are practically fighting each other for my business. I wouldn't do it even if I were desperate, because if I were desperate I'd probably be at greater risk of default.

                "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

                by Involuntary Exile on Thu Nov 14, 2013 at 02:57:18 PM PST

                [ Parent ]

                •  Here's what the state of CA has to say (0+ / 0-)

                  https://www.ftb.ca.gov/...

                  A purchase money loan (that is, a loan taken to “purchase” your home) is generally considered to be a non-recourse loan in California. Refinances, second mortgages, and “cash out” loans are generally recourse loans.
                  I don't know what the legal aspect is, but recourse seems to be the norm here for everything but initial mortgages.
              •  This was the case in CA (and might still be) (1+ / 0-)
                Recommended by:
                AoT

                Maybe this has changed - there was some law working it's way through legislature to prevent that, but not sure where it ended up.

                --
                Make sure everyone's vote counts: Verified Voting

                by sacrelicious on Thu Nov 14, 2013 at 04:36:22 PM PST

                [ Parent ]

            •  Only 12 states are non-recourse states (0+ / 0-)

              Some states allow both but the majority of states have recourse written in their laws consequently all mortgages issued in those states are recourse loans.

              Most mortgages in this country are recourse mortgages.

              If you refinance a mortgage, it is almost always a recourse loan even in non-recourse only states, such as California.

              You would really have to look at the laws in each state to see the differences on recovery, statute of limitation, etc. for recourse.

              In Ohio, they have two years from the final court action and can recover all monies except attorney fees.

              The IRS treats recourse amounts as imputed income so if it wasn't for the moratorium on that people that were foreclosed on would get whacked with huge tax bills the following April.

              I believe Fannie and Freddie are not pursuing recourse actions - though I don't know whether there is a moratorium or it is purely discretionary.

        •  Because banks (5+ / 0-)

          hate to own properties. It's not a 'core competency' for them; it's not even something they're set up to do. They don't employ hundreds or thousands of property managers, nor do they want to. It's why REO properties so frequently fall into total disrepair, because the bank doesn't have anybody coming round to check on the empty properties let alone perform routine maintenance; either they just let the houses sit, or they outsource the job to contractors who do a half-assed job because they know the bank won't be double-checking their work.

          So, banks will sell foreclosed properties at a steep loss, so they can get rid of them quickly, just to relieve themselves of the hassle and so the properties don't further degrade on their non-watch. 50% seems like quite a bit of an outlier here, but selling at a 10 or 20% discount off market value to be rid of it, no one would blink at that.

          That said, I'm not sure there's anything illegal going on here, or that there's a good legislative fix that would make it illegal. (Maybe if you went on an expensive legal fishing expedition, you could find some collusive behavior that would fall under the scope of antitrust law. Even then, there's a lot they could get away with. For instance, the bank and the investor could still agree that "I'll sell you this house, this particular time, at a super-steep discount, if you'll finance the purchase with me at an above-market interest rate." (Which wouldn't be an issue, anyway, because almost all of these investor deals are all-cash purchases.) What would be illegal would be if the investor said "I won't buy from you, or from any bank, unless you give me a sweet deal," and the investor was large enough that the bank would be screwed if it didn't knuckle under.)

          For the people here who are upset about this, I have to wonder what the proposed remedy would be here... would we get better outcomes if we passed laws mandating that banks had to visibly list each property through the MLS, keep it on the market a reasonable period of time, and then sell it to whatever buyer who makes the largest offer? Obviously, we don't subject individual sellers to that kind of irritating requirement, and certainly banks, like individuals, are free to make bad financial decisions and leave money on the table because they're impatient and don't see the big picture... or just because they want to sell it quickly to a friend and save themselves a lot of hassle and, more importantly, a broker's commission. Small-time sellers acting individually don't have the power to distort a whole market, though, and when you have that combination of shortsightedness and cronyism at an institutional level, sure, it can have broader consequences for buyers and renters.

          Editor, Daily Kos Elections.

          by David Jarman on Thu Nov 14, 2013 at 12:19:46 PM PST

          [ Parent ]

        •  They can write off the loss (1+ / 0-)
          Recommended by:
          AnnCetera

          which is the difference between the value and the sale price. They get paid both coming and going.

          Loyalty to petrified opinion never yet broke a chain or freed a human soul in this world--and never will. Mark Twain

          by whoknu on Thu Nov 14, 2013 at 09:07:20 PM PST

          [ Parent ]

      •  Precisely. Something's wrong with that picture. (4+ / 0-)
        Recommended by:
        MNDem999, rabel, MGross, David Jarman

        An individual homeowner doesn't sell at a 50% discount, especially if an offer comes in at full price. Neither does a financial institution selling one-offs. Why would they leave all that money on the table? Financial institutions with portfolios of REO properties might possibly discount one particular property when selling a whole package, allocating prices among the properties according to their own portfolio requirements, but otherwise it makes no sense.

        There's something wrong with that story. Note that it has no links. It is told as an anecdote:

        "Lets look at what this looks like based on the true experience of a typical homebuyer I know:" (emphasis mine)
        If this anecdote is true, the first thing that struck me is that the homebuyer appears to be bottom fishing:
          "A property listing will post with a dramatic change in the asking price.
            I will immediately contact my realtor and tell him I want to see the property."
        Apparently, what it takes to get this homebuyer's attention is a dramatic change in asking price. If this guy is desperate for a house, why limit the search to only those houses with dramatic drops in price? Why not conduct a search the way most serious buyers do, giving his agent a list of specifications including upper and lower price point, location, number of rooms, "must haves" and "unacceptables"? If he's focused on bottom fishing and a bigger fish eats his lunch I have no sympathy.

        As to the flabbergasting 50% drop in asking price, I simply don't believe it. I want to see a real address I can look up. Sales are public records, and a sale for substantially below market value will impact a lot of people including the seller, the seller's agent (significantly lower commission), the entire neighborhood (affects appraisals of all other comparable properties), and the municipality (reduces the tax base by lower property values). That kind of sale is going to draw a whole lot of attention from a large group of people who have their own interests to protect. I'd expect the county treasurer and county prosecutor to be at the top of the list of people looking into the legitimacy of such a sale.

        "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

        by Involuntary Exile on Thu Nov 14, 2013 at 10:09:03 AM PST

        [ Parent ]

        •  You missed a key sentence or I didn't write it (5+ / 0-)

          clear enough

          Every day, repeat every day - I keep 3 realty webpages open - I check them  >>every 15 minutes<<  for new listings or new price changes.
          for new listings or new price changes.

          This person is not looking for cheapo deals - they are looking for a home.  They look at everything that is in their price range - new listings and price changes.

          •  What's the address of the discounted house? (3+ / 0-)
            Recommended by:
            rabel, KenBee, JeremySchro

            Let us crowd source the story. If it's true, there is a high likelihood of fraud in that sale.

            If your friend is really looking at everything in his price range, why did he not make an offer at the original asking price rather than waiting for a 50% price drop to then offer the old full price? This makes no sense.

            I don't accept anecdotes as facts unless I can verify them. As far as I'm concerned, this diary is more about creating heat than light. I read all of the links and I found one was two years old, one was undated, and only one, the DealBook article, was less than six months old. You've strung together articles written over at least two and a half years to create an attention-grabbing diary, now at the top of the rec list, about a problem which does not exist except possibly in a limited number of real estate markets.

            "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

            by Involuntary Exile on Thu Nov 14, 2013 at 10:58:57 AM PST

            [ Parent ]

            •  Three of the citiations are less than 6 months old (1+ / 0-)
              Recommended by:
              Laconic Lib

              The one from Charlotte is less than one week old.

              I don't think anything I can say or prove will stop this thread - so I will stop it now.

              •  The Time article is dated June 13,2011 (1+ / 0-)
                Recommended by:
                Chi

                And is about genuine realtor fraud. The MSN article is undated, but I'd guess it was from 2010 or 2011 since the topic is short sales, and those peaked in 2011. The DealBook article is dated June 3, 2013, and is about the recent rise in house prices and provides an evenhanded picture of what is going on. I'd recommend everyone read that article.

                I just sold a house I owned in the Des Moines suburbs. It was on the market for eight says before I accepted an offer for $3,000 less than the asking price, which is exactly where I excepted it to sell, and I had to give zero in credits to the buyer. The only contingencies were the usual for inspection and mortgage. It was purchased by a young family, not by an investor. It sold quickly because it was priced right and it had almost no competition in that location at my price point.

                The thing is, there's a lack if inventory in many markets right now, but the shortage in supply is not the result of nefarious dealings by investors and financial institutions. The real cause is the lack of ordinary churn in the market. People can't buy a new home if they can't get a mortgage, and mortgage underwriting standards have really tightened, so they stay put. There are also a great many homeowners who used their houses as piggy banks or bought with no or very low down payments and now find that a sale would require them to come to the closing table with cash. Those people, if they're still able to make their payments, are not about to sell if they don't have to.

                Price increases driven by short supply do not last forever. Eventually market prices increase to the point where more homeowners chose to sell. More sellers means more competition, and prices moderate. Of course, there are anomalous markets where demand always outstrips supply. Most of the country, however, does not live in one of those markets.

                "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

                by Involuntary Exile on Thu Nov 14, 2013 at 12:16:50 PM PST

                [ Parent ]

            •  There was a recent article on HuffPo (6+ / 0-)

              a couple weeks ago, about a town in Ohio (either outside Cleveland or Cincinn, sorry can't remember which), where 144 homes had been sold to a property group, which had originally been owned by the actual town builder. This was the first I had heard about this practice happening, the widow sold the homes at deep discount to unload all of them.

              I wouldn't doubt that property management companies are doing this, and they ARE in the business of managing property. It actually makes sense for them to do so. But 100mil a week to buy homes? That sorta boggles the brain a bit.

              It is every person's obligation to put back into the world at least the equivalent of what they takes out of it. - Albert Einstein (edited for modern times to include everyone by me!)

              by LeftieIndie on Thu Nov 14, 2013 at 11:22:20 AM PST

              [ Parent ]

            •  He didn't say he offered the original full price (1+ / 0-)
              Recommended by:
              Involuntary Exile

              He said he made a "FULL PRICE CASH OFFER" -- presumably for the new full price.

              To put the torture behind us is, inevitably, to put it in front of us.

              by UntimelyRippd on Thu Nov 14, 2013 at 02:16:18 PM PST

              [ Parent ]

          •  No way (3+ / 0-)
            Recommended by:
            Involuntary Exile, KenBee, miracle11

            We're not getting the full story here. No way a seller turns down a guy with 100% cash-in-hand for someone offering 50% unless there are some serious shenanigans going on that we're not getting told about.

            Involuntary Exile explains all the various players in a home sale that would be going ballistic if cases like this were even slightly common. We're not being told the whole story here.

            [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

            by rabel on Thu Nov 14, 2013 at 11:01:51 AM PST

            [ Parent ]

            •  Diarist offers no address to verify his anecdote. (1+ / 0-)
              Recommended by:
              rabel

              That's doubtless because it is a mythical story. No one leaves that kind of money on the table unless realtor fraud is involved, and in that case the seller has a cause of action against his agent, not to mention that the agent would be subject to criminal prosecution. That's the point of the linked MSN article.

              "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

              by Involuntary Exile on Thu Nov 14, 2013 at 12:29:25 PM PST

              [ Parent ]

            •  He did not say that he offered 100% of the (1+ / 0-)
              Recommended by:
              rabel

              original asking price.

              To put the torture behind us is, inevitably, to put it in front of us.

              by UntimelyRippd on Thu Nov 14, 2013 at 02:21:37 PM PST

              [ Parent ]

              •  Good catch. n/t (1+ / 0-)
                Recommended by:
                rabel

                "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

                by Involuntary Exile on Thu Nov 14, 2013 at 02:47:29 PM PST

                [ Parent ]

              •  Ah yes (0+ / 0-)

                I see, the anecdote sort of mislead me, but yes, my error was on interpreting the story.

                We inspected the property 3 hours later, I made a FULL PRICE OFFER-CASH, and told my realtor that I was willing to increase my offering price.

                I took that to mean the original full price, when in fact i really means he offered the exact same 50% off price that the seller already had another offer for.

                [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

                by rabel on Thu Nov 14, 2013 at 05:02:19 PM PST

                [ Parent ]

          •  Also (1+ / 0-)
            Recommended by:
            rabel

            if it were an insider deal, why would the seller go through a RE agent?

            •  Because, in order to play the game (0+ / 0-)

              you have to go through the motions. Even with mark to market, you have to make a showing that you have at least tried to sell a house and realtors only make money after a house settles......

              There is a lot of hinky stuff going on.

    •  ... until it happens to you (21+ / 0-)

      i lived in orlando until 2010 and it was pure devastation what happened there.  i drove past miles of empty houses on the 429, including areas where the earth had been exposed to start building the foundation and the left it looking like a martian landscape.  when i moved, my street was 50% foreclosed for > 2 years.  what these companies are doing is acting like a bunch of damn vultures - which is unfair given vultures are incredibly important.

      first the killed my city, then they bought it on the cheap.

      •  A Bunch of vultures that caused the 1st mess. n/t (5+ / 0-)
      •  . (1+ / 0-)
        Recommended by:
        Chi

        everything that is going in the 'financial' markets is a crime scene.  It really doesn't matter what some say about "what was the crime here?" its just a willfully ignorant question ... the trillion dollar a year deficits are not for paying for food stamps ... its to keep the banking system from imploding still     Florida was one of the worst hit states in the country

        "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

        by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 06:35:24 PM PST

        [ Parent ]

    •  Because its another part of the economy (20+ / 0-)

      that regular people aren't gaining from.

        Young people that want to buy their first house are priced out of the market.
        Meanwhile, everyone else are increasingly forced to send their rent checks to Wall Street rather than small landlords.

      None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

      by gjohnsit on Thu Nov 14, 2013 at 09:08:14 AM PST

      [ Parent ]

      •  I don't get it (2+ / 0-)
        Recommended by:
        Involuntary Exile, MGross

        Is the supposed problem falling prices or rising prices?

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Thu Nov 14, 2013 at 09:36:24 AM PST

        [ Parent ]

      •  Small landlords (13+ / 0-)

        In most metro areas small landlords have been forced out of the business by policies that are designed to improve the housing stock.

        I used to own some rental property, as did my father.  It used to be  nice way to earn a retirement income if you are "handy".    My tenants often told me I was the best landlord they had ever had.

        Cities, trying to clean up the housing stock, place strict rules on how long a property can remain in a "substandard" condition.   Peeling paint on molding at the very top of a two story duplex got me cited once.   Also once a boarded up back door to a deck that no longer existed.   A crack in the linoleum in the kitchen.   Window glass with a small crack in the corner, or window sash that would not open all the way because of the house (built in 1897) shifting.

        Judged by these standards, my personal homes (that I lived in) have always been in violation.  

        While well intentioned, these crackdowns on small landlords forced us out of the business, and favored landlords with multiple properties who had an internal crew of "fix it" guys.

        It is not surprising that the shift is happening from small landlords to large local landlords to corporate landlords that can afford to have not only repair people, but also lawyers and appraisers on their staff.

        I think this falls in the category of "unintended consequences".   Excess regulation forced the small operator out of the business.  

        •  I've only dealt with a real estate appraiser once. (1+ / 0-)
          Recommended by:
          Alfred E Newman

          My impression was that the profession is an institutionalized scam. Am I wrong?

          Reaganomics noun pl: blind faith that unregulated capitalism can provide unlimited goods and services, that government is bad and it can increase revenue by decreasng revenue. Synonyms: Friedmanomics. Antonyms: common sense. Related Words: Laffer curve

          by FrY10cK on Thu Nov 14, 2013 at 10:22:19 AM PST

          [ Parent ]

          •  No (2+ / 0-)
            Recommended by:
            FrY10cK, Nisi Prius

            Speaking as a former workout specialist/attorney during the S & L crisis. Many now defunct Savings and Loans used appraisers to give them whatever price they needed to make the loan they wanted to make to developers.  The banks knew it, the appraisers knew it and the regulators knew it.  And then all those developments went underwater. And the taxpayers lost billions.  Not as much as in 2008, of course.  But as you see, greed trumps historical lessons.

            "If you tell the truth, you'll eventually be found out." Mark Twain

            by Steven D on Thu Nov 14, 2013 at 10:45:29 AM PST

            [ Parent ]

          •  They appraise faucets, paint (2+ / 0-)
            Recommended by:
            FrY10cK, nota bene

            and flooring, and compare square footage to neighboring properties, but they're not inspecting the foundation or climbing on the roof. That's where the true value of a property lies.

            I'm living in America, and in America you're on your own. America's not a country. It's just a business.

            by CFAmick on Thu Nov 14, 2013 at 11:49:54 AM PST

            [ Parent ]

          •  Asset or Asshat (0+ / 0-)

            An appraiser looks at the entire house, definitely not just the "Faucets, paint and flooring", as someone said down thread.

            An appraiser looks at the actual predictable value of the property, considering every factor that is available.

            Now, the appraisal that this person comes up with can vary widely.  It depends on who he is working for.   If he works for YOU, and you are a large corporate buyer, he is not going to inflate the property value.

            If he works for the SELLER, or the "Realtor", he will inflate the property price as much as possible.   If the banker can pass the risk on quickly to others, he wants to make the loan, and it  wants to accept the appraisal.   This is why it is so important that lenders should have to retain the debt rather than bundling it and selling it.

            An appraiser is almost never working for the independent  occasional home-buyer.  Neither is the "Realtor".  

            An appraiser is like  a lawyer.   An asset if he is on your side, or an asshat if he is not.

    •  Why Do They Do It? (9+ / 0-)

      Why do they sell to the lower bidder? What possible reason could they have? That's what must be a scam.

      Even if houses are for sale to only insiders but not to the general public that's a problem. My own house was foreclosed by one bank, and sold at a big loss to another (foreign) bank but not on any public market. I bought it from the other bank at a much higher price. Why wasn't I able to make the foreclosing bank a higher offer? Why did I have to send so much more money (overseas) to a bank that added no value whatsoever?

      "When the going gets weird, the weird turn pro." - HST

      by DocGonzo on Thu Nov 14, 2013 at 09:18:24 AM PST

      [ Parent ]

      •  One possibility (5+ / 0-)

        The investment groups have cut a deal with the banks to buy in bulk all the excess inventory of foreclosed properties.  Banks may want them off the books as quickly as possible.  At the same time, the banks (or to be precise an affiliated company of the same mega-financial conglomerate) may be an investor in the houses being bought.  So they may be playing both sides of the street.

        "If you tell the truth, you'll eventually be found out." Mark Twain

        by Steven D on Thu Nov 14, 2013 at 10:49:50 AM PST

        [ Parent ]

        •  Playing both sides may be more than we know. (3+ / 0-)
          Recommended by:
          MNDem999, maybeeso in michigan, Chi

          Maybe all that robo-signing to foreclose on homes as fast as possible (especially by BofA, headquartered in Charlotte) was all intended for this very purpose.   Banks DO NOT WANT foreclosed properties to remain on their books and this scheme is the perfect remedy.   They can even sell the homes back to themselves through third party deals.

          This cries out for federal investigation.  

          The priest said, "Today's sermon is called 'Liars', but first I have a question. How many of you have read Chapter 66 in Matthew?" Nearly every hand went up. "You're just the group I need to speak to," the priest said. "There's no such chapter."

          by Back In Blue on Thu Nov 14, 2013 at 11:48:31 AM PST

          [ Parent ]

    •  A market that is rigged by insiders is not a good (10+ / 0-)

      market. Even a free market advocate would agree that transparent markets are the best. When insiders get special favors, and listings are just for show- that is not a transparent market.

      Also- it is not an efficient market. The actual seller of the house, is cheated out of receiving the highest bid. The middle man is cheating the seller. Again- not a good thing in any kind of market.

      •  It's unclear, but it looks like foreclosures only. (0+ / 0-)

        No individual homeowner has to take an offer they don't want.  If a RE agent or company defrauded a seller this way, they would be in serious trouble.

        The priest said, "Today's sermon is called 'Liars', but first I have a question. How many of you have read Chapter 66 in Matthew?" Nearly every hand went up. "You're just the group I need to speak to," the priest said. "There's no such chapter."

        by Back In Blue on Thu Nov 14, 2013 at 11:50:56 AM PST

        [ Parent ]

        •  Regardless, somebody is getting shorchanged (2+ / 0-)
          Recommended by:
          VClib, MNDem999

          Even if it's the bank/ note holder who owns the home. Somebody is getting shortchanged when a higher cash offer is bypassed in favor of a lower offer from the agent's buddy.

          •  Not directly. (2+ / 0-)
            Recommended by:
            MNDem999, gramofsam1

            The price was never a real price for anyone on the open market.  It could only be obtained by someone willing to buy a whole lot of properties just like any other volume purchase.  It most likely saved the banks money that would've been a loss.

            Assuming we are talking about bank owned properties and not individual owners, the scandal here is that it was the banks predatory and abusive sub-prime lending policies the contributed massively to the market fall-out and foreclosure crisis that created this new market "opportunity".  

            Almost as if they planned it that way.

            The priest said, "Today's sermon is called 'Liars', but first I have a question. How many of you have read Chapter 66 in Matthew?" Nearly every hand went up. "You're just the group I need to speak to," the priest said. "There's no such chapter."

            by Back In Blue on Thu Nov 14, 2013 at 03:34:34 PM PST

            [ Parent ]

    •  Yes, artifically so (10+ / 0-)

      I personally experienced this.

      Went through a divorce, marital home being sold, needed to find a new house.

      The market is tight.  Hardly any inventory...or, let me rephrase, any inventory anyone would want.  

      Foreclosures? Forget it, unless they are in such bad shape that when you walk up, the house shouts at you "I'm a money pit"!  Anything in half decent shape, is never "available" or has "multiple offers".  

      I was very frustrated, and so was my realtor.  We were sifting through the dregs that were left over after the investors had their pick.  

      I ended up with an estate sale house, neglected, but liveable.  Lots of fixing.  

      The investors are making it unnecessarily hard for normal people and artificially inflating values.  So I guess we'll have another bubble so again.

      •  . (0+ / 0-)

        "So I guess we'll have another bubble so again."

        So I guess we have another bubble again  (present tense)...  there fixed it for ya!

        "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

        by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 06:50:04 PM PST

        [ Parent ]

    •  REITs are evil (0+ / 0-)

      that's the issue here.

      Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

      by Cedwyn on Thu Nov 14, 2013 at 10:03:47 AM PST

      [ Parent ]

    •  You tell 'em Mgross. (7+ / 0-)

      Houses weren't made to shelter families! They're instruments for speculators!

      Reaganomics noun pl: blind faith that unregulated capitalism can provide unlimited goods and services, that government is bad and it can increase revenue by decreasng revenue. Synonyms: Friedmanomics. Antonyms: common sense. Related Words: Laffer curve

      by FrY10cK on Thu Nov 14, 2013 at 10:19:09 AM PST

      [ Parent ]

    •  well, of course, slavery was "perfectly legal" too (2+ / 0-)
      Recommended by:
      Laconic Lib, UntimelyRippd

      So was child labor.

      The libertarian loonie sense of humanity really underwhelms me.

      In the end, reality always wins.

      by Lenny Flank on Thu Nov 14, 2013 at 10:58:47 AM PST

      [ Parent ]

  •  Who are they buying them from? (31+ / 0-)

    I wouldn't be surprised to find that these houses are going through some government agency, including the Fed, with the government eating a huge loss on every property, while the racketeers are hauling in billions.

    I am become Man, the destroyer of worlds

    by tle on Thu Nov 14, 2013 at 07:15:14 AM PST

  •  One reason investment companies are able to (19+ / 0-)

    snatch up properties quickly and at advantageous prices to those offered by first-time homebuyers is that the investment companies are willing to pay cash, so the seller does not have to wait to see if the putative buyer's financing will encounter problems.

    The person you "know" whose experience you recount needs to find another realtor and do so immediately, as the reator he or she is working with is not acting in either his or her best interests or even the best interests of the seller. N.B. Realtors have a legal fiduciary responsibility to act in either the buyer's or the seller's best interests.

  •  Well, realtors squealing is because they get a (24+ / 0-)

    percentage of the sales price and they don't appreciate the collusion. Where were they when home buyers were being rooked into single family homes built for $150,000 and sold for a cool million?
    An offer does not mean a completed sale. If a person wants to buy a house, s/he can go to the public records (which are all online by county), determine who the owner is and consult with the seller directly. If a person has not been brought to the seller by a realtor, then the seller has no obligation to reject an offer that's higher. If the buyer has cash, then s/he should consult his/her own attorney to draw up the deed and arrange for a title search. There is no compulsion to rely on realtors. Indeed, much of the rigamarole associated with buying a residence is a consequence of lenders (bankers and mortgage companies) making demands about insurance coverage, surveying services, credit checks and processing fees.

    That said, let me observe that homeownership is highly overrated. For many people, owning property is an albatross that keeps them tied down and in hock to the tax man and the banks. I say that as a person who currently owns three homes and two vacant parcels and can attest that owning property is a lot of work. Renters have many more options IF they take the trouble to sign leases that protect their rights to a defined period of occupancy, privacy and functional integrity.

    •  That's a very big IF: (13+ / 0-)
      Renters have many more options IF they take the trouble to sign leases that protect their rights to a defined period of occupancy, privacy and functional integrity.
      And I say that as an owner of rental properties.

      I'm living in America, and in America you're on your own. America's not a country. It's just a business.

      by CFAmick on Thu Nov 14, 2013 at 07:34:06 AM PST

      [ Parent ]

    •  David Dayen had a good article (4+ / 0-)

      about this practice in Salon a few weeks ago.  The pros were that it was at least helping to find a bottom in the housing market, and indeed, renting is for many people who were sucked up into the housing bubble better than owning, but the risk is the impersonal nature of the rental companies means repairs ain't that great (i love renting separate apts in owner-occupied), and there's some evidence of a rental property bubble in some places (and finally some new construction), as blackstone at all are again securitizing the income streams from the rents.  Nobody thinks rental income is as sacrosanct as mortgage payments, though, but it'll be an interesting test for the SEC's new regulatory powers over ratings agencies.  Let's see how this plays out.  Brokers not getting commissions on sales should be the least of anyone's concerns, and I'm not sure what laws are necessarily broken.  If someone is rented a lemon, the consequences of walking away are pretty low.  I do worry that some of these bubble communities don't have adequate rental protection laws like you see in cities where renters are a political constituency that has to be recognized.

       

      Difficult, difficult, lemon difficult.

      by Loge on Thu Nov 14, 2013 at 09:17:23 AM PST

      [ Parent ]

    •  Exclusive Representation (2+ / 0-)
      Recommended by:
      ColoTim, Nisi Prius

      Don't home sellers typically sign a contract with a seller's realtor giving that realtor the exclusive right to sell it? So the owner can't sell it to anyone who doesn't pay the seller's realtor their comission. Most realtors who are any good at selling require that exclusivity.

      "When the going gets weird, the weird turn pro." - HST

      by DocGonzo on Thu Nov 14, 2013 at 09:22:51 AM PST

      [ Parent ]

    •  We were reluctant landlords (1+ / 0-)
      Recommended by:
      greengemini

      for a little over a year. We couldn't wait to unload that piece of property. Major headache. I like owning my own home though (one home only!).

      Join Las Vegas NV Kossacks ~ Doubt kills more dreams than failure ever will

      by miracle11 on Thu Nov 14, 2013 at 09:56:06 AM PST

      [ Parent ]

    •  I agree and disagree (4+ / 0-)

      the way housing is set up is a scam.

      I have been a renter and an owner.  All in all, for most people, owning is better. IF you get a decent, modestly priced property in a place with affordable taxes.

      There are certain lifestyles (frequent travel, long working hours, etc) that ownership is not the best.  Then finding a good rental with a decent landlord that wont' gouge you on rent increases and will maintain the place reasonably is key.

      But either way, rent or "own" you never really own anything.  Even when your mortgage is paid, you still must pay taxes or they can take it from you.  Or if they decide, a highway would look nice where your house is, they can take it from you.  If you rent, you hope your landlord is responsible, because if they fall behind on their mortgage, out you go.  The landlord can change the rules, or raise the rent, or decide to sell - and then your life is majorly impacted.

      Damned if you own, damned if you rent.

  •  Cue Leonard Cohen (21+ / 0-)

    Everybody Knows..the dice are loaded.

    We are so ready to embrace real reform...but most of those who claim to bring change work for the casino.

    If cats could blog, they wouldn't

    by crystal eyes on Thu Nov 14, 2013 at 07:26:37 AM PST

  •  Geez, would a big investor try to rig a market? (14+ / 0-)

    Has that ever happened before? Here in Murica?

  •  The short sale aspect stands out (9+ / 0-)

    It's very hard for a distressed owner to receive a short sales.

    What are the odds that a few guys in suits from New York City are stopping into small town and regional banks and saying, "We'll buy every short sale in your portfolio on the day the owner signs papers for straight up cash, and you get to write off your loss?"

    I'm living in America, and in America you're on your own. America's not a country. It's just a business.

    by CFAmick on Thu Nov 14, 2013 at 07:30:52 AM PST

  •  Gosh, I wish they'd come to my neighborhood (7+ / 0-)

    We have a hundred empty lots no one has built on.  We bought our house foreclosed in 2010 - never occupied because the builder of the neighborhood went bankrupt in 2008.

    We got our house for a song at the time, but the hope was that someone - ANYONE - would come and build up the rest of the neighborhood.

    Nobody wants our empty lots.  No one, investor or private, wants to build in our desolate neighborhood.  Eight houses were built out of the planned 100.  Only three of the eight houses are owner occupied, the other five are rentals.  

    It's depressing and while I love my house, my neighborhood makes me very sad.  If an investor wants to come along and flop those lots, I won't object.

    The Cake is a lie. In Pie there is Truth. ~ Fordmandalay

    by catwho on Thu Nov 14, 2013 at 07:34:25 AM PST

    •  when the resale (6+ / 0-)

      market is no longer profitable the big money will go for lots.

      depending on where you live it is either happening now (arizona/Atlanta/Texas) or will happen in the next 2-5 years (nashville, orlando, tampa, charlotte, inland empire)

    •  I'm so sorry to hear about your neighborhood (2+ / 0-)
      Recommended by:
      greengemini, Laconic Lib

      or lack thereof.

      We buy a home with hopes of what can be - unfortunately the actions of others make it what is can't be.

      Looks like the investors are finding the homes that were built attractive for rentals.  

    •  That's because your "neighborhood" is sprawl (5+ / 0-)

      Used to be productive farmland, right?  Or maybe a nice forest?  And now it's useless sprawl and bankrupt empty lots.  Nice.  
      You'll consider this to be harsh, but it's the cold truth.  Your "neighborhood" shouldn't exist.  The streets should be ripped up, the eight houses torn down, and it all be put back to growing food.

      •  Make lemonade. (2+ / 0-)
        Recommended by:
        Norm in Chicago, WheninRome

        Grow community gardens on the empty lots.  Have the county/town designate them parkland.

        Pollyanna-ish, I know, but . . .

        "A developed country is not where the poor have cars. It's where the rich use public transportation." - Mayor of Bogota

        by Time Waits for no Woman on Thu Nov 14, 2013 at 10:22:22 AM PST

        [ Parent ]

      •  Surprisingly, no (3+ / 0-)

        We're the final subdivision in the unified city-county that is officially zoned as "urban" - a five minute, three block walk from the major artery in town.  We're two miles from the new Caterpillar plant, which means the city plans to extend the bus line back out our way this January.   I'm four miles from my office, and my husband is 7 miles from his office, meaning our morning commutes are 10 minutes and 15 minutes, respectively.  

        I believe the land was undeveloped because it's too hilly for farmland, and it's too urban for use as a tree farm.

        The Cake is a lie. In Pie there is Truth. ~ Fordmandalay

        by catwho on Thu Nov 14, 2013 at 10:44:17 AM PST

        [ Parent ]

        •  Also, we were planned for mixed use (3+ / 0-)

          The nearest road to us is zoned business-industrial, and has about ten large empty lots that they'd hoped big box retailers would snap up.  Those plans fell through when a new outdoor strip mall opened up three miles away in the next county over, where business taxes are lower.  The commercial lots are completely empty too.

          The Cake is a lie. In Pie there is Truth. ~ Fordmandalay

          by catwho on Thu Nov 14, 2013 at 10:51:24 AM PST

          [ Parent ]

        •  Surprising, but okay (1+ / 0-)
          Recommended by:
          kimoconnor

          Athens, GA, yes?

          If you can actually walk to a grocery store I'll give your neighborhood a pass.  If it's as close in and walkable as you say, then it will fill in eventually.

          But still, I'd much rather see the older established neighborhoods redeveloped.  The street grid of my neighborhood dates back to 1935, and many of the houses do as well.  But where individual houses were badly neglected by previous owners, they either get rehabbed, or torn down / rebuilt.  In that way we upkeep the neighborhoods without paving over new land.

          Maybe those empty commercial lots can be turned into parkland?

          •  Yes (1+ / 0-)
            Recommended by:
            Norm in Chicago

            Sam's Club is the nearest grocery store-like thing, about half a mile away.  Publix is a bit further at a mile and a half - my husband has made the walk before and I could in a pinch.  Unfortunately, Atlanta Highway is pretty dangerous for pedestrian traffic.  We really need the sidewalks filled in for walking to the grocery store to be a viable option.

            I would love to have parkland in the area.  They actually left the trees on the commercial lots, and we seem to be in a deery area because I see them all the time.  There is a small lake off the highway that's begging to have something done to it.

            The Cake is a lie. In Pie there is Truth. ~ Fordmandalay

            by catwho on Thu Nov 14, 2013 at 02:15:31 PM PST

            [ Parent ]

    •  Empty lots are tough (0+ / 0-)

      Investors want to buy a property, suitable for rent with minimum improvements, for significantly less than the replacement cost. That's a model that works assuming reasonable rents and a long term prospect of higher prices for homes in that neighborhood.

      "let's talk about that"

      by VClib on Thu Nov 14, 2013 at 01:31:28 PM PST

      [ Parent ]

  •  I truly believe there is a concerted effort (32+ / 0-)

    afoot to end the concept of single family home ownership in this country.

    There are many moving parts to this.

     I have posted many times about the existence of a Treasury White Paper from 2011 about the housing finance industry in which it is clearly stated that the goal is to get practically all of the nation's housing with the exception of a very small percentage financed privately without government guarantees. If this scenario comes to pass, the pool of buyers will shrink to a fraction of what it is today and the qualifications for obtaining a mortgage will require stellar credit and large down payments, Owning property will go back to what it was prior to the explosion of the middle class and the American Dream of home ownership - primarily the purview of the wealthy and privileged in society. The rest will be tenants of the landowning class. The landowning class will be comprised of corporations and wealthy private individuals who will have the ability to eschew mortgages altogether and pay cash, so they won't particularly care about the difficulty of obtaining a mortgage.

    There really is only one way to circumvent this and that will be if larger numbers of selling owners become willing to owner finance the sale of their property. The advantage to them is that they could earn a good interest rate and obtain a higher price for the property than what a cash corporate or private buyer would pay. The downside is that the the majority of their money remains illiquid and they won't have access to the bulk of it for whatever their goal had been in selling in the first place.

    I said there were other moving parts to the motivations of TPTB who are trying to redesign our system of private home ownership :

    Think about how risky real estate home ownership will become in the next few decades as we really start to reap the results of global warming and rising seas and flooding and/or droughts. Vast swaths of property will go under water or be razed by storms or be flooded, etc. et. It simply won't be possible to insure properties in the future from natural causes, in my opinion. If that becomes true, then only the deepest of pockets will be able to overcome the losses incurred and rebuild. The tenant class will simply have to move along and relocate elsewhere.

    The giant redistribution of wealth is all leading inevitably to this outcome as I see it. Austerity is real and it is by design. Many of us will have to return to the nasty, brutish and short lives of serving our overlords that we think of in feudal or medevil terms, certainly not the brief window of democratic prosperity we were privileged to witness and exist in.

    “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

    by Phoebe Loosinhouse on Thu Nov 14, 2013 at 07:45:03 AM PST

    •  Thank you - Could you refer me to a couple (1+ / 0-)
      Recommended by:
      Betty Pinson

      of your diaries or articles.  I would be interested in reading them?

    •  Privileged or cursed? (1+ / 0-)
      Recommended by:
      MNDem999
      the brief window of democratic prosperity we were privileged to witness and exist in.
      I think I wish I had never seen and lived in that world.

      The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people. - 9th Amendment

      by TracieLynn on Thu Nov 14, 2013 at 08:44:38 AM PST

      [ Parent ]

    •  Don't forget (1+ / 0-)
      Recommended by:
      MNDem999

      Rmoney said as much in his campaign speeches last year - that rich people ought to buy up the foreclosed homes and rent them out to people.

      Scary but that evil little man's dreams of Rich Owner Class - the rest the Rental Class is coming true.

      Why do Republicans Hate Americans?

      by Caniac41 on Thu Nov 14, 2013 at 12:40:42 PM PST

      [ Parent ]

      •  The thing about single family homes as (1+ / 0-)
        Recommended by:
        WheninRome

        investments, is that they really usually aren't all that great as investments. There simply is no economy of scale in a single family like a person would get from owning an apartment house.

        The cost of taxes, insurances, maintenance, repairs, upkeep, property management fees, professional fees, vacancy periods, remodeling etc. are huge. There is very little profit at the end of the day. I think there would be even less profit at the end of the day if a person or corporation owned a lot of single families because then you would also need a fleet of managers, maintenance people, etc.to service them.

        This is the rude surprise all these corporation are in for. Ever wonder why big corporations didn't go in for single family ownership/management before?Why didn't/don't the big home builders simply keep their inventories as "investments"?

         Guess what? There was a reason.

        When the hedge funds and corporations figure this out, they will want to dump a large number of these properties and we will go through another predictable bust cycle.

        “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

        by Phoebe Loosinhouse on Thu Nov 14, 2013 at 01:44:43 PM PST

        [ Parent ]

        •  Property management companies (0+ / 0-)

          have been dealing with those things in large numbers for years and could easily provide estimates for costs on rental properties for large investors, I would be very surprised if these companies weren't on board before the large investors started throwing the money into houses.

          In places like Oakland(which I was just priced out of) I would be surprised if they weren't making a crap ton of money on these deals. The investor buys the houses and the management company tells the how much they can expect for income from them. The management companies may well have the monopoly here in the practical sense.

          And running up prices would depend a lot on where you are. They could purposely keep places empty since they got them on the cheap. If they're getting them for half price then they could keep half the units empty to push up prices. And it's good to remember that they may only be doing this short term. They buy a bunch of houses and artificially inflate rents and housing prices and then dump them on other institutional investors a year later before anyone figures out that it's a bubble. That's where the real crash comes.

    •  . (0+ / 0-)

      absolutely.  With the destruction of job stability and the constant onslaught of 'outsourcing' ... the 30 year mortgage and 'safe' investments with a reasonable interest rate (ie for pensions: > 6 %) cannot possibly survive.  I guess this is the grand plan of oligarchy.

      "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

      by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 07:16:56 PM PST

      [ Parent ]

  •  "Leave it alone"... (23+ / 0-)

    ...equals under-the-table payments to realtors to funnel homes to the "investors."

    "Life is the crummiest book I ever read - there isn't a hook, just a lot of cheap shots, pictures to shock, and characters an amateur would never dream up." - Bad Religion

    by TheOrchid on Thu Nov 14, 2013 at 08:08:48 AM PST

  •  flopping?:? (3+ / 0-)
    Recommended by:
    TomP, rabel, KenBee

    pray tell, how?   If I own a property and commission someone to sell it and I get two offers, why would I pick the lowest one?   Are you saying that I am not being shown both offers?   If so, I can't believe it isn't illegal and actionable.  

    What we need is a Democrat in the White House. Warren 2016

    by dkmich on Thu Nov 14, 2013 at 08:09:55 AM PST

    •  This practice started with shorts and 4closures (11+ / 0-)

      and the owner was long gone by then - just the bank and investors.

      You may not see the second offer.  Based on what I am reading - it is now moving into private sales - but not as successfully - for the very point that you make and because of some honest realtors.  But it happening on private sales also.

      It's important to know who is buying the house.  My friend listed above in the example is going to research who the house was eventually sold to and for what price and is prepared to sue, the banker - and the investment firm if it went to an LLC or other corp at a lower price than she offered.

      •  So your friend made an offer and thinks she lost (1+ / 0-)
        Recommended by:
        ColoTim

        out to a lower offer? Nothing illegal about that. I apologize if I read that incorrectly.

        To me, that's the beauty of science: to know that you will never know everything, but you never stop wanting to.

        by JeremySchro on Thu Nov 14, 2013 at 08:28:59 AM PST

        [ Parent ]

        •  There very well may be something illegal about it. (2+ / 0-)
          Recommended by:
          AoT, WheninRome

          We do regulate commerce in this country, you know. I realize that comes as a bit of a shock, especially to people born after 1980, but just because two people agree to a transaction, doesn't mean the transaction is legal.

          To put the torture behind us is, inevitably, to put it in front of us.

          by UntimelyRippd on Thu Nov 14, 2013 at 02:35:42 PM PST

          [ Parent ]

      •  Doesn't matter to the bottom line, for (0+ / 0-)

        which the owner of record is responsible or not.    I hope your friend does sue.    

        What we need is a Democrat in the White House. Warren 2016

        by dkmich on Thu Nov 14, 2013 at 09:05:53 AM PST

        [ Parent ]

      •  "some honest realtors", no such thing. These (1+ / 0-)
        Recommended by:
        Ted Hitler

        underhanded techniques are nothing new. I put a prime rental/investment property up for sale back in the '80's. Little did I know until it was too late that my 'realtor' lowballed it to her daughter and SIL. Result was that I realized ~$8-10K less than I should have received (I still doubled my investment over a ten year period, but that nick was pure theft).  

        We’re Ready, Wendy’s Ready! WTF Are We Waiting For? Bring ‘em on! The revolution has begun! Come and take it!

        by Bluefin on Thu Nov 14, 2013 at 11:50:23 AM PST

        [ Parent ]

    •  It's definitely actionable. (14+ / 0-)

      And in a short sale, the owner of record is still the homeowner and not the bank and the homeowner is the person who signed the listing papers with the agent and to whom the agent is responsible.

      “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

      by Phoebe Loosinhouse on Thu Nov 14, 2013 at 08:26:49 AM PST

      [ Parent ]

      •  Thanks - I will let them know n/t (0+ / 0-)
        •  I was responding to dkmich's comment (6+ / 0-)

          as to whether the seller was seeing all the offers - that was the person I meant would have cause for complaint if all the offers were not being presented to them.

          “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

          by Phoebe Loosinhouse on Thu Nov 14, 2013 at 09:09:39 AM PST

          [ Parent ]

          •  could go to the seller and ask if their offer had (0+ / 0-)

            been forwarded to them and discussed and rejected and why?

            They may have cause to sue the RE agent as well as any regulatory RE entities...heh. yeah....

            considering how careful and freaky my realtor was about thgis, I would say that in California at least there had better be some documentation and signatures..or else..something something.

            And could be why the RE agent was warning them off...'leave it..'

            This machine kills Fascists.

            by KenBee on Thu Nov 14, 2013 at 01:36:48 PM PST

            [ Parent ]

            •  This is exactly the reason why it is so (1+ / 0-)
              Recommended by:
              KenBee

              insanely stupid for anyone in the real estate industry to think that they can get away with shady practices - it is just too easy to be found out. The records are public - the buyers and sellers names are public and the sale price is public. Any buyer could fairly easily in most cases make contact with a seller if they really wanted to.

              Agents protect themselves by making sure there is a clearly documented trail of offers being presented.

              “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

              by Phoebe Loosinhouse on Thu Nov 14, 2013 at 02:29:16 PM PST

              [ Parent ]

              •  yes and why the institutional buying may be the (0+ / 0-)

                reason here behind many of these assorted anecdotes.

                As to whether something is wrong with it and what can be done about it, I am not seeing much except the long term obvious tug of war/balance/imbalance between renters and owners/landlords and owners/occupiers. Collusion between institutional sellers and buyers is a bug or a feature, it depends...

                If there is a society goal of 'home ownership' it would be good to have politicians sign up for that idea and followup on it with appropriate measures and the money and , heh, actual funding to enforce them...and on and on.

                This machine kills Fascists.

                by KenBee on Thu Nov 14, 2013 at 02:35:40 PM PST

                [ Parent ]

              •  We're talking about institutions that got away (0+ / 0-)

                with the sub-prime mortgage scandal scot free for the most part. While it may be likely that they will get caught I find it likely that they expect that some lower down the totem pole people will get in trouble, like with the robosigning outrage.

    •  Yeah, what's up with this (3+ / 0-)
      Recommended by:
      greengemini, ColoTim, KenBee

      Seems pretty easy for the guy in the story above to just go talk to the person who allegedly sold their house for 50% off when the guy is willing to pay cash at full price. What's the reasoning behind taking 50% when someone else is trying to hand you 100%?  

      [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

      by rabel on Thu Nov 14, 2013 at 08:50:10 AM PST

      [ Parent ]

      •  The previous owner (1+ / 0-)
        Recommended by:
        MNDem999

        has to make up the difference.  If the loan was owned by Freddie or Fannie then they will go after the owner for the rest or write it off as a loss.

        Meanwhile the buyer can hand the seller a few thousand in cash under the table for helping out.

        Republican tax policies have led to financial conditions which have caused Republicans to demand cuts to programs they have always opposed.

        by AppleP on Thu Nov 14, 2013 at 10:15:25 AM PST

        [ Parent ]

    •  You would pick the lowest one if that was a cash (3+ / 0-)
      Recommended by:
      MNDem999, Loge, Sparhawk

      offer. Especially if the higher offer was from somebody where the sale was contingent on the sale of another property.

      This happens all the time. I've done it myself (picked the lower offer) for this very reason. The seller can pick any offer he or she wants if he or she receives two or more offeres.

    •  Yeah, that bothered me too. But how would the (7+ / 0-)

      seller find out that the higher offer was being suppressed?  

      One way I thought of that it would be to the seller's advantage to sell a house a a lower price would be if the seller owned a whole bunch of houses in the area and the lower price offer was part of a larger group offer.  Like "Sell us all 13 houses you own between Main Street and South Street and between Tenth Avenue and Sixteenth Avenue for $$$$$$$.  If any of those houses is not included, the offer is withdrawn."  

      Another possibility is that the "seller" and the "buyer" are branches of the same megacorp, and it's not really an honest transaction.  

      "My country, right or wrong; if right, to be kept right; and if wrong, to be set right." -- Sen Carl Schurz 1872

      by Calamity Jean on Thu Nov 14, 2013 at 09:10:57 AM PST

      [ Parent ]

  •  you are misunderstanding the situation (8+ / 0-)

    I believe, completely.

    The actual situation is that these companies already have HUGE exposure to poorly performing mortgages.  They simply can't afford for the bottom to drop out of the housing market, because then their house of cards will collapse.  They are artificially propping up the housing market.  Their main concern isn't making money in the future or becoming uber-landlords, their ONLY concern is tricking their current stockholders into thinking everything is fine.

    They already got rid of mark-to-market, but even their current fantasy evaluations can't just Tinkerbell their way out of a housing market where houses have a third their original value (which is the true market price).

    They are just tapdancing until they can get out with a golden parachute and retire.  The sellers are not getting ripped off, because they are actually receiving what the true market would bear.  If these investment clowns were out of the picture, there would be no housing market at all.  First-time homebuyers are inconvenienced, yes, but eventually the steam will run out on these big bank shenanigans, and the houses will be buyable again, at a market price.

    Young people don't have jobs.  Young people all want to live in the city and take public transit to work.  Young people are willing to live in microapartments, communes, hipster trailer parks, and in their parents' basements.  Baby boomers are retiring and trying to sell their homes.  There IS no housing market, there isn't even a rental market outside the city.

    This is all a con game, like this:

    http://www.huffingtonpost.com/...

    •  Wow thats a broad brush. I don't live in the city, (4+ / 0-)
      Recommended by:
      Betty Pinson, MNDem999, DocGonzo, mrkvica

      I'm young, and I'm currently looking to buy.

      To me, that's the beauty of science: to know that you will never know everything, but you never stop wanting to.

      by JeremySchro on Thu Nov 14, 2013 at 08:27:57 AM PST

      [ Parent ]

      •  Sure, but you can't fight demographics (3+ / 0-)
        Recommended by:
        terabytes, Sparhawk, mattc129

        Wall Street is in the mortgage market in a huge, overexposed way, and there just isn't the demand to prop up their crappy assets.  This is all a con game for the stockholders.

        It's a win-win for them, they get a big bite out of the few first-time homebuyers out there and they keep the plates spinning in the air for a little while longer.

        •  Agreed (4+ / 0-)

          I live in the Boston area. I and most people I know are late 20s / early 30s.

          The rule of thumb for people I know: the more money they make, the closer to the city they live.

          If they were boomers and this was 1985, the high earners would live out in the suburbs and buy McMansions. But they don't. They all prefer to live close to the city and especially areas with a lot of activity like Cambridge (Kendall Sq), buildings in downtown and near Fenway, etc. Rental and purchase prices are skyrocketing through the roof.

          People I know who live farther away tend to be those who can't afford to live closer.

          Now, this is obviously anecdotal and I have a huge selection bias. But if high earners tend to live in the city, who is going to help the boomers by buying their houses from them?

          The suburbs are dying. Don't buy a suburban home unless you've really done your homework. If you own a suburban house, get out while you can.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Thu Nov 14, 2013 at 09:54:28 AM PST

          [ Parent ]

        •  Also agreed, along with Sparhawk above (4+ / 0-)

          I'm 26, going on 27 in a few weeks, and I just bought a studio in Brooklyn. Even if I didn't buy, I'd still rent in NYC because I want to live in NYC. I don't want to own a car; in fact, I've had a Zipcar membership for the past 3 years and I literally have never used it once.

          A newer problem is now that so many people want to live in cities, we need to address unit availability. But yes, suburbs are crazy boring to most young people these days. To Sparhawk's point, I do think there's going to be a suburban housing collapse once Millennial's parents start dying. There's going to be a huge influx of housing inventory that either our Millennial peers won't be able to afford nor desire to move to in the first place.

          •  The suburbs will (3+ / 0-)
            Recommended by:
            MNDem999, VClib, Cassandra Waites

            always attract middle and upper middle class families.  Going to K-12 school in NYC is for the gifted, 1%, and poor. An urban setting makes it more difficult to raise a family unless you have oodles of money.    

            Some people like a private yard and even driving.

            •  For now, but unless those suburbs have (2+ / 0-)
              Recommended by:
              MNDem999, mattc129

              good public transit then they won't be very viable for a long time. Urban areas are viewed as not being family friendly, but that's changing with demographics. Gentrification is bringing the suburban set to the cities.

              •  Gentrification means housing for people (2+ / 0-)
                Recommended by:
                WheninRome, AoT

                who make, relatively speaking to ordinary folks, a fuck-ton of money.

                To put the torture behind us is, inevitably, to put it in front of us.

                by UntimelyRippd on Thu Nov 14, 2013 at 02:39:40 PM PST

                [ Parent ]

                •  It depends where that gentrification is happening (0+ / 0-)

                  Sure, the gentrification of Oakland is the people you're talking about, but there is gentrification in an increasing number of lower income places like Philly and Detroit. For the record, I just got gentrified out of Oakland. It doesn't start with people with a fuck-ton of money. It starts with poorer artists ad the like and then the more well off people see that there are white artists and radicals in an area and it becomes trendy. It happened really fucking fast in Oakland. The large institutional investors are part of the reason.

              •  Most of the NE corridor has pretty good public (0+ / 0-)

                transport from the suburbs. I can hop on the train by my apartment and be in center city philly or wilmington in 20-30 minutes, and that's true of most philly suburbs.

                To me, that's the beauty of science: to know that you will never know everything, but you never stop wanting to.

                by JeremySchro on Fri Nov 15, 2013 at 05:17:27 AM PST

                [ Parent ]

    •  That may be true for some markets (3+ / 0-)
      Recommended by:
      MNDem999, mrkvica, Laconic Lib

      but Blackstone MN articles claim it's a speculative financial decision.

      The Twin Cities doesn't  need Blackstone to prop up home prices.

    •  Why Sell for a Lower Price? (3+ / 0-)
      Recommended by:
      Sparhawk, mrkvica, greengemini

      The part of the story in this diary that doesn't make sense is where sellers are selling to investors for less than actual offers from other willing buyers. That is a serious problem that sounds like a serious scam, of the now typical colossal proportions.

      The US housing market is far more complex than you describe, and is subject to lots more demand than  just young hipsters willing to live anywhere. But somehow also only in mass-transit cities? And Baby Boomers who are trying to sell their houses, but aren't trying to buy or rent new ones? Your picture isn't just painted with a broad brush, it's painted in fractional dimensions.

      "When the going gets weird, the weird turn pro." - HST

      by DocGonzo on Thu Nov 14, 2013 at 09:28:58 AM PST

      [ Parent ]

      •  a lot of these properties are foreclosed (0+ / 0-)

        so the "seller" isn't the tenant.  

        Baby Boomers want to live in smaller places with public transportation.  Young people want to live in urban places with public transportation.  Do the math--Wall Street has.

        •  So? (0+ / 0-)

          So the seller isn't the tenant (resident you mean).  Explain why the owner bank wants to sell to a buyer bank for less than to a buyer individual.

          Everyone wants to live on Boardwalk or Park Place, but they can't. Handwaving about "the math" doesn't say anything.

          "When the going gets weird, the weird turn pro." - HST

          by DocGonzo on Thu Nov 14, 2013 at 10:25:09 AM PST

          [ Parent ]

          •  contagion (1+ / 0-)
            Recommended by:
            MNDem999

            http://homebuying.about.com/...

            The bank controls who is the buyer in a short sale.  And with today's market, I would assume most sales are short sales.

            The big assumption I am making is that the buyer can pull shenanigans with the public sale price.  How well are those prices policed?  If an accurate sale price never gets into Zillow, it can't affect the market--if a house short sells in a forest...

            Now maybe I'm full of baloney with that, and these corporate buyers are very aboveboard with reporting the sale prices, just like they are so good with having paper copies of mortgages and having other proper accounting procedures.  But these big financial players are all pretty interconnected, and they all are overexposed to the housing market.

            •  Wrong Assumptions (1+ / 0-)
              Recommended by:
              cordgrass

              Why would you assume most sales are short sales? Short sales are rare, because the bank is allowing the mortgagee to sell for less than enough to pay off the mortgage. I shopped for them starting in 2009, and found them rare, whether in the NYC area or elsewhere.

              Prices are part of official listings in the MLS, and are policed.

              It sounds like everything you're posting in this discussion is "full of baloney". You don't seem to know anything about the actual real estate market, whether its condition or its mechanics or rules. Yet you are posting as if you are some kind of expert.

              "When the going gets weird, the weird turn pro." - HST

              by DocGonzo on Thu Nov 14, 2013 at 11:47:54 AM PST

              [ Parent ]

              •  well time will show who is correct nt (0+ / 0-)
              •  Also, too bad you aren't Blackstone (2+ / 0-)
                Recommended by:
                MNDem999, AoT

                http://www.bloomberg.com/...

                Blackstone has been purchasing through foreclosure auctions and short sales, in which banks agree to accept less than is owed on the mortgage, after more than 5 million homeowners lost their homes since the market’s peak in 2006.

                It’s bought so quickly it’s “warehousing” more than half of the homes it’s acquired as it completes the purchase and hires staff and contractors to renovate and rent the properties, Gray said. It takes about 30 days to fix each home and then as much as 30 days to lease the property, he said.

                Blackstone doesn't seem to have any problem at all finding short sales.
    •  Wow, way to sh*t on us Millennials there (1+ / 0-)
      Recommended by:
      mkor7

      The housing market was ruined for us, and thats why we rent and pursue even less savory options like living with our parents if necessary.

      You say it as if we're intentionally screwing up the housing market.  No.  It's a rigged game, and most of us don't have enough money to play, especially since its foolish to ever view real estate as a true investment anymore.

      Good job being sympathetic with those less fortunate than yourself.

      "Believe nothing, no matter where you read it, or who said it... unless it agrees with your own reason and your own common sense." -The Buddha

      by Brian A on Thu Nov 14, 2013 at 09:37:52 AM PST

      [ Parent ]

      •  I rent (0+ / 0-)

        I live in a one and half bedroom apartment with three people, so...fuck you.

      •  You don't owe anyone anything (2+ / 0-)
        Recommended by:
        Brian A, mattc129

        Least of all miring yourself in an expensive homeownership situation so some current homeowner can retire comfortably.

        Renting is awesome. Living in apartments is awesome and comparatively cheap (don't need to spend money furnishing, don't need to cut the grass, don't pay for upkeep).

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Thu Nov 14, 2013 at 10:18:53 AM PST

        [ Parent ]

        •  You know, I agree (3+ / 0-)
          Recommended by:
          greengemini, Cassandra Waites, mkor7

          My wife and I are quite happy renting.  But we live in a suburban area, and it makes us appear as second-class citizens in the eyes of our neighbors and fellow towns-folk.  Often times its as simple as the obviously-false 'You don't pay property taxes, therefore you don't contribute to our community!"  (Of course we do, through our rent, dummy).  It's really really hard to break the mold that 'home-ownership makes you a better person / family', which has been drilled into us since the 1950s.

          "Believe nothing, no matter where you read it, or who said it... unless it agrees with your own reason and your own common sense." -The Buddha

          by Brian A on Thu Nov 14, 2013 at 10:25:27 AM PST

          [ Parent ]

        •  Correct. Not everyone has to own (4+ / 0-)

          I chose to buy because of the following: I enjoy living in Brooklyn and have no desire to live anywhere else, at least in the foreseeable future; I feel my employment is secure enough to sustain a mortgage; and I was lucky enough to use an inheritance to fund my down payment.

          But owning isn't for everyone, nor does it have to be. There's a lot of flexibility in renting that I now no longer have, albeit by choice.

        •  I don't know where you live but it's not (2+ / 0-)
          Recommended by:
          MNDem999, WheninRome

          comparatively cheap in the Philly suburbs. Rents have skyrocketed. All of my friends my age who own homes pay 200-300 less a month in mortgage then I do in rent.

          To me, that's the beauty of science: to know that you will never know everything, but you never stop wanting to.

          by JeremySchro on Thu Nov 14, 2013 at 11:02:47 AM PST

          [ Parent ]

          •  . (0+ / 0-)

            "friends my age who own homes pay 200-300 less a month in mortgage then I do in rent."

            that is very, very common ... all over the country.  In the Seattle area I have home in a rural area that costs $200 less a month than a decent 1 bedroom apartment.    I also rent a room in a house close to the city because my work demands it (on call, all the time, megahours at times).

            My brother in Dallas moved out of his apartment in downtown Dallas and bought a condo because it is at least $300 a month cheaper because the rents are going up all over the place  ($850 a month 3 years ago to $1100 a month) ... owning a condo $800 a month

            "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

            by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 07:34:14 PM PST

            [ Parent ]

        •  I bought a year ago in June in Indianapolis (2+ / 0-)
          Recommended by:
          VClib, Sparhawk

          It's on an corner lot in a subdivision that was built in 1960-61 by Justus Homes in Warren Township.  We loved it when we looked at it and felt like it was worth every penny, so we offered list  --- $54,900 and asked the seller to pick up the closing costs.

          We ended up splitting them and the seller paid for a 1-year Home Warranty and fixed the one thing (getting the bathroom exhaust to vent outside instead of to the attic) that the inspector dinged on the home inspection.

          The house is a 3 bedroom red-brick ranch. When it was built it had an attached 1-car garage, but the original owner converted it into a family room by cutting a series of archways through the load-bearing wall separating it from the rest of the house. (It's our library.) Then they built a detached 2-1/2 car garage on the back corner of the lot to replace it.

          The subsequent owner we purchased it from was divorced, his kids were grown, and he had retired. He was moving into an apartment community near his grandkids.  He'd recently replaced the roof (a full tear-off), the HVAC system was only 5 years old, and the year before he had enclosed the backyard and garage with a 6 ft -- wooden privacy fence in addition to doing a good job of keeping everything maintained.  Since he was moving to an apartment he gave us the stove and refrigerator, the garbage cans, and an assortment of lawn and garden tools.

          I was able to get a 30-yr fixed FNMA loan and only had to put 1.5% down.  I'm carrying mortage insurance, and escrowing for taxes and Home Insurance -- but even with all of those costs rolled into it my monthly payments are a bit less than $450 a month.  A one bedroom studio apartment in a crappy neighborhood rents for that.  -- So I'm saving a lot.  The 2-bedroom apartment we left was renting for $825.  Also my utility costs are less than they were in the apartment. Not a lot less -- but a bit less.

          The median home price in the Indianapolis MSA is headed toward $150,000 -- but that 's because Fishers, and Carmel, Westfield, and Noblesville are part of the MSA.  Right now my house is proabably worth about $58,000. (Mainly due to the less than stellar school district, which doesn't affect us as we don't have kids and have no plans for any.)  

          The house next door is a 4-bedroom split-level with a carport and detached garage.  It sold last year for $66,000.  But there are yellow-brick versions of my house where the garage has not been converted a few blocks away that are listing at $39,000 and $44,000.

          So buying is an option.  If you are looking in an affordable market.  Pricing varies dramatically from market to market and neighborhood to neighborhood.

          •  When you're talking about... (2+ / 0-)
            Recommended by:
            AoT, mattc129

            ...real estate costing $50k it's a whole different ball game than $350k McMansions. There's not a lot of risk involved: you're going to lose, what, $20k if things go absolutely sour?

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Thu Nov 14, 2013 at 03:46:42 PM PST

            [ Parent ]

            •  This is naive, but as a young guy I'm still amazed (0+ / 0-)

              at how even a $60,000 home is too expensive for some families. My down payment alone was almost $60,000. I guess there really aren't that many good jobs in the wide open spaces. Coming from suburban NJ and now Brooklyn, that's perplexing to me.

              •  There's a hundred acre HOLE in the middle of my (1+ / 0-)
                Recommended by:
                Throw The Bums Out

                town.

                There used to be thirty GM auto plants in it.

                Those were good jobs.

                Now? There's temp services. Wal-mart. Fast food. Drive an hour to Indianapolis...hope you've got a small car that's fuel-efficient, or the gas'll kill you.

                When you come to find how essential the comfort of a well-kept home is to the bodily strength and good conditions, to a sound mind and spirit, and useful days, you will reverence the good housekeeper as I do above artist or poet, beauty or genius.

                by Alexandra Lynch on Wed Nov 20, 2013 at 07:03:33 PM PST

                [ Parent ]

    •  You certainly got something right (5+ / 0-)

      There is no housing market except for whatever the Federal government and GSE's throw money at.
        There hasn't been since the end of '07.

       I saw an article the other day showing the banks are still losing money on foreclosures despite the bump in the housing market.

        There's more to it than you explained, but you aren't that far from the truth.

      None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

      by gjohnsit on Thu Nov 14, 2013 at 09:53:34 AM PST

      [ Parent ]

      •  I worked in the industry for six years (5+ / 0-)

        Sometimes I feel like I singlehandedly destroyed the economy.

        All those subprime mortgages were a con for stockholders--they knew they were getting crap at the time.  Does a leopard change its spots?  Before, the only incentive was greed.  Now the incentive is still greed, but with the added threat of working to avoid company going under and loss of job.  And the longer they can keep everything propped up, the less likely criminal prosecutions will be forthcoming.

  •  Last night on "The Nightly Business Report" on PBS (13+ / 0-)

    ... there was an interview with an exec from Pulte Homes, one of the biggest home builders in the country. He was talking about how the bottom had fallen out of the new home market for the lower to middle end of the market, and that Pulte would have to concentrate on the upper middle and high end markets to sell new homes.

    The reason? The very issue you're citing. The lower end of the market is now a single family home rental market.

    These equity firms have all but locked up a monopoly on the low to mid range market in many areas. The Justice Department should be investigating this.

    But as we all know, don't hold your breath waiting for that to happen...

    "Bob Johnson doesn't have special privileges, because really, why would I entrust that guy with ANYTHING?" - kos November 9, 2013

    by Bob Johnson on Thu Nov 14, 2013 at 08:41:36 AM PST

  •  It distorts the market, to be sure (14+ / 0-)

    but isn't it the sellers who take the hit?  Who are the sellers who are settling for a 50% offer when they could have something close to a 100% offer?  Are they banks holding foreclosed properties?  Are they discounting the properties because that makes them easier to sell in lots rather than as individual sales?  Why are realtors willing to write off these commissions?  Are they getting non-commissioned compensation?  If they are, what does that do to the traditional market?

    I smell a rat, or rather, several rats.  There is no way this happens without collusion between the investment companies, the realtors and the property owners (probably banks or mortgage companies).

    Knowledge without conscience is the ruination of the soul -- François Rabelais

    by ccyd on Thu Nov 14, 2013 at 08:58:43 AM PST

  •  Been happening for quite a while now (4+ / 0-)
    Recommended by:
    MNDem999, mrkvica, a2nite, Bluefin

    this was set in stone when little noticed (except here of course there were several diaries) decision to offer bank REO picked up though bank closings and transfers  in large scale packages to select bidders.   Some individual home sellers, in a dead market, also sell to the investors who frequently pay cash and are the only real buyers in the market.

    It is Romney's plan, let the market bottom and sell off the former owner occupied homes as rentals.   It is a huge wealth transfer and it is happening in all the 'busted former boom' markets.

    Areas that didn't bust because there was no real boom still tend to have average markets.

    The process is of course made worse by depressed employment and eroding wages,  people who would want to buy can't because they can't meet new lending standards or are uncertain about making a commitment because of their job situation.

    •  Partially true - but not everywhere (3+ / 0-)
      Recommended by:
      sillycarrot, mrkvica, Laconic Lib

      Not true everywhere - it is happening across US in markets that aren't busted - and weren't as bad as Phx, or Fl.  People just don't know it is happening.

      Areas that didn't bust - still have this happening in them and people who want to buy and can afford it - can'
      t cause they are competing with robo-d investor/bankers on offers.

      •  in markets without significant (1+ / 0-)
        Recommended by:
        KenBee

        foreclosures, there are fewer bargains, and while the big investors can and will buy from individual homeowners,  the real money is in picking up bargain basement deals from banks who collect on the loss share agreements, and that is drawing the most investor dollars.

  •  Also happening in stronger markets like NYC (8+ / 0-)

    Especially in prime Brooklyn brownstone neighborhoods like Brooklyn Heights, Prospect Heights, and Park Slope, where I currently live. A lot of corporate and/or international buyers are scooping up all the townhomes so they can split them up and rent them out. That, coupled with the general increased wealthy associated with NYC buyers, makes it really hard to get anything for 20% down.

    I just bought my first place in June with the minimum 20% down, but I was able to get a place with that little down because I bought a studio and the market for those isn't as high as 1 and 2 bedrooms. I talked to brokers during my search who all told me people were placing offers with 50% or more down — sometimes buying full price in cash, often over ask. And these are $800,000–$2 million+ residences.

    Luckily, even considering the rising market, I feel I got a great deal considering comparables and location, so I'm not worried that I overpaid.

    •  Thanks for the example!!! n/t (1+ / 0-)
      Recommended by:
      mattc129
    •  Not the same thing. (1+ / 0-)
      Recommended by:
      mattc129

      NYC has been a highly competitive market sine the 80's.  Prices continued to rise even even during 2009 in prime neighborhoods.  It's just simple demand and unfortunately, it's pushing out people who can't afford it.  That's not the same as banks selling their foreclosures in bulk to investors at a discount.  

      The priest said, "Today's sermon is called 'Liars', but first I have a question. How many of you have read Chapter 66 in Matthew?" Nearly every hand went up. "You're just the group I need to speak to," the priest said. "There's no such chapter."

      by Back In Blue on Thu Nov 14, 2013 at 12:12:29 PM PST

      [ Parent ]

      •  Ok, that difference is there but investors' (0+ / 0-)

        influence is still strong. So they might not be buying up nice townhomes at foreclosure, but their presence and cash still drive up prices making it difficult for the average buyer. Sure, "average buyer" means something totally different in NYC than elsewhere, but it's still a related real estate issue.

  •  The headlines say the housing market is up (6+ / 0-)

    Just like the GDP number and income numbers, the bump in real estate doesn't filter down to the working class.
      It's an insider game.

    None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

    by gjohnsit on Thu Nov 14, 2013 at 09:06:20 AM PST

  •  I have seen stuff like this but usually the buyers (2+ / 0-)
    Recommended by:
    Catte Nappe, greengemini

    were individual investors and they indeed often made an offer within minutes. But the reason they were able to get a house at a good price (although not 50% off the market price, maybe 10% off) is b/c they paid cash.

    If it's a short sale the seller is not motivated to get the highest offer and will often accept any offer as long as the bank agrees to it. So some of the experiences you describe may be due to that. In some cases the bank ends up rejecting the offer and the house ends up back at the market.

  •  Why Sell for Less? (5+ / 0-)
    This after clients of hers made an offer higher than the asking price and lost the purchase - BUT the house sold for WAY less to an investor - $40,000 less than her clients had offered.

    This is the part that doesn't make sense. Why does the seller sell it for a lower price than someone else is offering?

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Thu Nov 14, 2013 at 09:15:16 AM PST

  •  Why R We Assuming Owner Occ - Don't Pay Cash (0+ / 0-)

    It's a bad assumption to make -
       That investors pay cash
       Owner Occupants don't pay cash.

    A lot of downsizing Boomers ARE paying cash.
    I'm sure there are fiscally responsible people in their 30, 40 and 50's that are paying cash

    It's a bad assumption to make -
       That investors pay cash
       Owner Occupants don't pay cash.

  •  Thoughts (5+ / 0-)

    It's also no different than institutional investors getting in first on IPOs at the introductory or "going up" prices rather than the highest prices when regular investors are let in.

    I think what is happening here is that banks have an opportunity to unload tons of inventory immediately, so their customers (Peterson!) get "bulk" pricing. The bank is probably told that for Peterson to continue doing business with them, they have to sell them homes at a certain discount and that they can't consider individual offers that are higher.

    Frankly, I'm not sure that it IS theft. It is certainly unfair and not in the best interests of the public. But theft is more like what many mortgage companies do to get houses foreclosed in the first place. Of course, if there are kickbacks and "bonuses" awarded to the mortgage companies by Peterson et al for getting houses foreclosed, then yeah, it's aiding and abetting.

    So to review, I would imagine the banks need to get rid of inventory and are willing to pay a price to get rid of it, if they can get rid of lots of it fast --- as opposed to sitting on houses for up to a year and going through the tedious sales process on a one-by-one basis.

    Misconduct by the government is by definition NOT a government secret.

    by Doug in SF on Thu Nov 14, 2013 at 09:42:26 AM PST

    •  thanks for this most concise comment (0+ / 0-)

      diary covers too many examples with too few details, and while a good dam topic the lack of focus has caused a lot of mental churning among the commentariat, but I think you got it right here.

       

      This machine kills Fascists.

      by KenBee on Thu Nov 14, 2013 at 01:59:10 PM PST

      [ Parent ]

  •  Do you understand why the investor pay less? (3+ / 0-)
    Recommended by:
    MNDem999, Simplify, greengemini
    clients of hers made an offer higher than the asking price and lost the purchase - BUT the house sold for WAY less to an investor - $40,000 less than her clients had offered.

        When she asked the listing agent why, she was told to "leave it alone."

    So what is the mechanism by which investors secure these deals?  (I'm asking out of ignorance, I'm not trying to case doubt on the report.)
    •  A couple of the comments - hint to bundling (3+ / 0-)
      Recommended by:
      sawgrass727, greengemini, Laconic Lib

      If an investor is willing to pay X dollars for a bundle of properties the bank may give them priority at a reduced rate.

      Whereas the owner occupant who wants one of those houses, that just happens to be in the bundle the investor wants, is out of luck regardless of what they offer.

      May not be the whole story - but it seems to make more sense than some of the guesses made.

  •  This totally explains (11+ / 0-)

    what happened to my brother.

    His house was foreclosing with BofA; he got an offer for almost market price and was relieved.  The bank refused.  He was furious and didn't get why.

    His house sat empty and unsold for another six months or so.  Then it sold for about 20% less.

    This explains it.

    "Mediocrity cannot know excellence." -- Sherlock Holmes

    by La Gitane on Thu Nov 14, 2013 at 09:49:07 AM PST

  •  Blackstone (10+ / 0-)

    Blackstone hedge fund blew into Sacramento with $200 million and bought up mostly vacant new subdivisions cheap.  They offer investors shares in the projected rents.  A big chunk of Sacramento was created as what will be an absentee-owned slum much like the old "projects" that became centers of crime.  Owner-occupied and "pride of ownership" are gone in these areas.  None of these homes ever functioned in the local multiple-listing system.  Agents with these multi-house deals sell to their friends or to set ups by the fat cats.  The "short-sale" era is mostly over where the bank pretended to modify the loan but really set up foreclosure while getting their guaranteed loan money from the government.  Then they dumped the house with an inside deal cheap to a friend who would flip it.  All of this should be criminal activity if we care about owning our own homes.  It is vulture capitalism run amuck.  There is now a "Bill of Rights" in CA that slows the crime.  Owners who could wait out the "bubble and burst" attacks are now trying to sell as prices are slowly falling into a more normal market of what a buyer can afford in a multiple-listing system.  The corruption was throughout the real estate system down to the lowest agent.  Crime at the top breeds crime at the bottom.  Be careful with your lender and your agent.

  •  hmmm (7+ / 0-)

    We've been running into the same things.  We're looking for a place in the Poconos and have been looking at foreclosed/short sale/needs TLC places for over a year.

    Suddenly  "Cash Only" has begun appearing in scads of listings - even on properties priced in the low to mid 200K range.

    I wondered what was up.  Now I'm not wondering so much.

  •  http://www.calculatedriskblog.com/ (0+ / 0-)

    I may have to start reading there again. I stopped because there is a lot of technical jargon for commercial real estate people. I have have to start reading there again.

    Reaganomics noun pl: blind faith that unregulated capitalism can provide unlimited goods and services, that government is bad and it can increase revenue by decreasng revenue. Synonyms: Friedmanomics. Antonyms: common sense. Related Words: Laffer curve

    by FrY10cK on Thu Nov 14, 2013 at 10:09:06 AM PST

  •  Suck it up, peasants (5+ / 0-)

    It seems as though every other bit of information coming down the pike these days leads me back to George Carlin's three minute rant that ends with "It's a big club, and you ain't in it."

    We really should have a life sized guillotine statue installed next to Wall Street's bull.

  •  Sounds like maybe an anti-trust violation (2+ / 0-)
    Recommended by:
    MNDem999, greengemini

    The GOP: "You can always go to the Emergency Room."

    by Upper West on Thu Nov 14, 2013 at 10:17:58 AM PST

  •  This will not end well (5+ / 0-)

    Single family housing does not have the economies of scale that apartment rentals do.   You need plumbers, electricians, and Heating/AC people to visit individual homes and beyond 25-40  or so separate homes, you need a need another set of maintenance and property management people.   Properties sitting empty between tenants and waiting for eviction get very expensive.

    If these out of town investors never visit the properties, they will slowly deteriorate from sleazy property managers not doing their jobs while collecting fat checks.  They will start cutting corners like the mortgage brokers did in the early 2000s bubble.   Renters never take care of homes the way owners do and with nobody watching it will be worse.  

    Neighborhoods will lose their sense of community and slowly fall apart as many people have mentioned already in comments above.  These investors tend to favor places with landlord friendly laws.

    Hedge funds and investment banks are already starting to slice and dice their home portfolios into securities.  We get to lose again when the pension plans and investment funds start buying them at top dollar because they have been valued in a crooked manipulated market and the bottom falls out once again.  The small investor or fireman's pension fund gets stuck holding the bag of deteriorating single family homes. The middlemen will have made their money and moved on to the next thing they can exploit.  

    Let's hope they don't acquire monopoly power in setting rental rates.  

  •  Tell me again why the house is sold for..... (0+ / 0-)

    .....less to investors? I didn't quite get that part. Great diary though.

    If you hate government, don't run for office in that government.

    by Bensdad on Thu Nov 14, 2013 at 11:01:54 AM PST

    •  Partly it's cash offers. (3+ / 0-)
      Recommended by:
      LillithMc, KenBee, Bensdad

      I suspect it's also partly very quick sales.

      But there also seems to be something underhanded going on.  Insider deals perhaps.  Someone inside banks is giving these big investor groups incredible deals?  No one in their right mind sells something for 50% off when they can get full price unles something underhanded is going on.

    •  Some of the comments - hint to bundling (4+ / 0-)

      If an investor is willing to pay X dollars for a bundle of properties the bank may give them priority at a reduced price per property.

      Whereas the owner occupant who wants just one of those houses, that just happens to be in the bundle the investor wants, is out of luck regardless of what they offer.

      May not be the whole story - doesn'tt make it right - but it seems to make more sense than some of the guesses made.

      •  Also depends on who has underwritten (1+ / 0-)
        Recommended by:
        Bensdad

        the loan. One would assume most of the plum targets were owner occupied. First order of liens is property taxes, which get a pounding by lower prices and then the insurance on the loan which should try to recoup losses paid out to lender for foreclosure expenses. There are stipulations in underwriting and bundling may miss a lot of the contractual clauses.

        Bundling for a "wholesale" deal may not be that simple, or maybe they are just trying to make it look simple, but underwriting is seldom that simple.

  •  This is so incredible. So hideous. (1+ / 0-)
    Recommended by:
    MNDem999

    Thank you for the diary which I am going to read in full when I get back home!

    "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

    by Gorette on Thu Nov 14, 2013 at 11:16:48 AM PST

    •  There are some really good comments (2+ / 0-)
      Recommended by:
      a2nite, Gorette

      that try to make sense of why this is happening, the possible impacts and things that could be done.

      I would recommend skimming / reading the comments also - as always the majority of the comments are thoughtful and well worth the read.

      Thanks!

  •  This is what has happened in SLC and (1+ / 0-)
    Recommended by:
    MNDem999

    surrounding counties. I've done the research and found that I could buy large plots of land an hour outside of D.C. and other metros less expensively than I could outside Salt Lake.

    At the same time, do a search for residential land inside Salt Lake City and you will find virtually NONE.

    When it is available it goes for about $1M per acre. And that's true for most of Salt Lake County, an area about 30 by 20 miles...

    Hard to create affordable housing when the land itself is prohibitively expensive. Add the zoning, which prevents most subdivision, and building codes, which are geared to large homes... You get the picture.

    Trust, but verify. - Reagan
    Vote, but Occupy. - commonmass
    The 3rd Way has squandered our Resistance for a pocket full of mumbles, Such are promises All lies and jests; still a kossack's about the horse race And disregards the effects...

    by Words In Action on Thu Nov 14, 2013 at 11:28:29 AM PST

  •  Hey, it's a sellers market (0+ / 0-)

    This is good for both sellers (obviously) buy also for existing homeowners that are gaining equity in their property - this enables many avoid foreclosure, sell without having to write a check, take out home improvement loans etc.

    The REITs aren't dummies - they see value and their actions are re-setting the market to where it should be - in many markets there was a large over correction to the downside post 2008.  As a buyer it sucks but the market is healthy and will re-set itself at the inherent market value.  Obviously the market isn't 100 percent efficient but it's not terrible either.

    Having bought and sold several houses/condos in SoCal, Arizona, and Colorado over the last 30 years we've seen this cycle before and I think that this run up is "less bubbly" that that in the 1980's and obviously the early 2000's.  Income to price ratios are healthy and are at or slightly below historic standards in SoCal.

  •  The only way to stop it is to not buy a house (0+ / 0-)

    from an investment corporation. Only buy the house directly from the bank, if it's a foreclosure, or if it's owned/mortgaged by a person.  They will stop when they are not making money.

    "Harass us, because we really do pay attention. Look at who's on the ballot, and vote for the candidate you agree with the most. The next time, you get better choices." - Barney Frank

    by anonevent on Thu Nov 14, 2013 at 11:54:44 AM PST

    •  No, it's for neighbors to complain (0+ / 0-)

      Many renters don't fit into single family neighborhoods.
      Too many pets, barking dogs, parties, loud personal disputes, lawn not mowed or maintained, snow removal in untimely manner.  All of these are city vilations. Neighbors will NOT hesitate to call city/cops on a rental with problems whether it's a Blackstone landlord or in town known landlord.

      This is the weak link in Blackstone's scheme. They are buying in strong markets. These places DO NOT WANT rentals. And the neighbors, house owners, have a way of dealing with this situation. It can lead to high tenant turnover and extra costs for owners.

  •  It is happening in Raleigh (4+ / 0-)

    American Homes 4 Rent are buying up a TON of houses in nicer neighborhoods and then renting them out.  When you look at neighborhoods to move into and realize that upwards of 20% of the homes are rentals - your own housing value goes down - renters are transient ..

    I am tired of Wall Street screwing us and we have no way of stopping it - because they are paying off anyone who can make it stop.

    Why do Republicans Hate Americans?

    by Caniac41 on Thu Nov 14, 2013 at 12:16:49 PM PST

  •  I think there's an even more sinister side (1+ / 0-)
    Recommended by:
    mkor7

    Remember when gas prices blew up in 2008 because insiders saw that the market was about to explode?  I think this is the 2013 equivalent of that debacle.  QE has created an unsustainable bubble in stock prices which (imo) will be exploding soon, and interest rates are ridiculously low, so there's no place safe to put money that it will make more.

    Except in housing.  Buying up properties right, left, and center you at least have a tangible asset for your cash, and leveraging it as this article suggests to buy at steeply reduced prices means you can then have it reappraised and added to your asset sheets at the actual market value.  

    On top of that, you can rent it back out to the very people who were screwed out of it by foreclosures, theft and the market collapse the corporate buyers caused!

    Republican threats amount to destroying the present if we don't allow them to destroy the future too. -MinistryOfTruth, 1/1/2013

    by sleipner on Thu Nov 14, 2013 at 12:33:09 PM PST

  •  I just bought a house myself (0+ / 0-)

    And ended up having to bid $10,000 over asking price to get it.  Fortunately it's exactly the house we want and we got in early, so we got extremely lucky.

    I have a coworker who's relatives have been trying to buy in a depressed market area (LA Northridge) and they say they keep getting outbid (cash offers) by tens of thousands (above asking price).  

    Republican threats amount to destroying the present if we don't allow them to destroy the future too. -MinistryOfTruth, 1/1/2013

    by sleipner on Thu Nov 14, 2013 at 12:34:52 PM PST

  •  One thing I notice about the housing market (0+ / 0-)

    It's always great!

    Prices going down? Great news! There are bargains to be had!

    Prices going up? Great news! Something something equity.

    If the pilot's good, see, I mean if he's reeeally sharp, he can barrel that baby in so low... oh you oughta see it sometime. It's a sight. A big plane like a '52... varrrooom! Its jet exhaust... frying chickens in the barnyard!

    by Major Kong on Thu Nov 14, 2013 at 12:35:57 PM PST

    •  . (0+ / 0-)

      don't forget the 'hurry up at these prices these homes will move fast'  and the 'hurry up, interest rates will be going up'  so pick one for whatever the situation MIGHT seem.

      Interest rates are not going anywhere very fast (except over a very narrow range) otherwise the whole deck of cards comes tumbling down

      "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

      by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 08:23:36 PM PST

      [ Parent ]

  •  It is worse they want to rent these properties (6+ / 0-)

    and them market the business as an investment. Best explained here in this piece on Salon:

    Remember mortgage-backed securities and the financial crisis they caused? This latest gambit will put you in shock

    Over the past couple of years, private equity firms and hedge funds have bought up over 200,000 single-family homes, mostly discounted foreclosed properties in communities wrecked by the housing crash, such as Phoenix, Atlanta, Tampa, Sacramento, Los Angeles and Riverside, Calif. They have spent billions to scoop up these vacant homes at fire-sale prices, renovate them, and rent them out, promising investors double-digit annual returns on the rental revenue. Private equity firms like Blackstone, which owns more than 40,000 single-family homes, think they can build an entirely new asset class out of this scheme, controlling the rental market for single-family homes. The irony is rich: Wall Street created the conditions for millions of foreclosures, then they sweep in to buy up the homes and rent them out, often to the same people they kicked onto the street.

    In order for this to work, firms need cash to outbid the competition. So Blackstone teamed with Deutsche Bank, Credit Suisse and JPMorgan Chase to put together the first-ever rental revenue bond, named “Invitation Homes 2013-SFR1.” Basically, Blackstone took out mortgages with the banks on 3,207 of its rental properties, in exchange for $479 million in cash, and they will forward rental payments to the bondholders to pay back the loan.

    (bolding mine)

    Read the entire article, this is more than just having big banks keep us from buying homes, they might cause another economic crisis and get away with it!

    Where ignorance is our master, there is no possibility of real peace. - Dalai Lama

    by kimoconnor on Thu Nov 14, 2013 at 01:02:15 PM PST

    •  This is a wonderful snip. Wish more pple would (1+ / 0-)
      Recommended by:
      kimoconnor

      have seen it.

      Thank you so much for looking up the article and posting this snip and link to the whole article.

      •  When I saw this I thought it deserved a diary (0+ / 0-)

        I am hardly a financial expert and do not feel best to do so, but I hope someone does.

        And I would not mind at all if you want to update the diary with this info.

        I think this is even worse than competing with Wall St. to buy a foreclosed home.

        Where ignorance is our master, there is no possibility of real peace. - Dalai Lama

        by kimoconnor on Thu Nov 14, 2013 at 01:32:35 PM PST

        [ Parent ]

    •  a sucker is born every minute nt (0+ / 0-)
    •  This would explain artificially (3+ / 0-)
      Recommended by:
      MNDem999, Cassandra Waites, LillithMc

      propping up house prices to help sell the rental revenue bond.  These higher prices do not correlate with shaky jobs, flat wages, and more stringent credit.  

      These homes will be fixed up, maintained, and managed on the cheap by an out-of-state investment firm.  Think hundreds of different homes with unique layouts, plumbing, AC units, roofs, gardens, etc. spread all over an area. Termites are going to be in heaven.  Tenants never complain about termites until the house falls down on them.  Even roof leaks are okay as long as it isn't ruining their stuff. Who wants a bunch of chemicals being sprayed or construction workers around?

      The homes will slowly deteriorate with each new tenant that passes through.  Time between rentals will increase and the quality of tenant the home attracts will fall with the deterioration as will the the neighborhoods if there are too many of them.  As the quality of the tenant falls, the evictions for non-payment of rent and damage increase.  That rental income may not look so good in a few years.  I'd bet their models don't account for that.

      Steer clear of these Rental Revenue Bonds if you possibly can.  There is a reason you don't find slumlords of hundreds and thousands of houses, the numbers don't work. Apartments and complexes all bunched together have economies of scale, SFHs don't.  

      If a true housing boom ever comes and they decide to bail, these house would all go on the market at once and crash it right back down.

    •  I have a hard time believing that this wasn't (2+ / 0-)
      Recommended by:
      MNDem999, kimoconnor

      planned. It's all terribly convenient. Crash the housing market and then buy it up dirt cheap. It's standard operating procedure. The big money folks like nothing more than to crash economies and profit off it.

      •  and (1+ / 0-)
        Recommended by:
        AoT

        they used blackmail to extort bail out money by crashing the economy .... and the govt still claims they want to defeat terrorists

        "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

        by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 08:27:31 PM PST

        [ Parent ]

  •  Sure, why not. The game is "speculation." (0+ / 0-)

    Thump! Bang. Whack-boing. It's dub!

    by dadadata on Thu Nov 14, 2013 at 01:29:04 PM PST

  •  Here it is in Indy (1+ / 0-)
    Recommended by:
    MNDem999

    2 out of state investors increasing....

    I can see how this can destroy any growth a neighborhood has

  •  Now wouldn't this be a better way for 60 Minutes (2+ / 0-)
    Recommended by:
    Notreadytobenice, WheninRome

    to be using its air time than touting the lies from Benghazi?  Yes, it would.

    The good we secure for ourselves is precarious and uncertain, is floating in mid-air, until it is secured for all of us and incorporated into our common life. Jane Addams

    by Alice Olson on Thu Nov 14, 2013 at 01:55:54 PM PST

  •  Where I live (4+ / 0-)

    (One of the nice, but not ultra neighborhoods in San Diego) this is the norm any more.

    On weekends I like to take walks, usually around the neighborhood.  If there is an open house (1-3, now showing!) I will go in and look around.  There are several realtors who specialize in my area, of which 2 are reputable, 2 are house flippers (slap on a new coat of paint and new turf, and ignore the bounce in the kitchen floor, and sell at a big profit), and 2 or 3 are ... Century 1000 faceless drones.  But all are friendly, in case you have money.  (I don't, and will never own a home unless I win the lotto), but they like to talk.

    Every house starts with multiple offers, most from people who never see the house.  On-line, or by the phone, often cash.  And those usually get the house.

    A 1200-1500 square foot house on a 5000 square foot lot, built (usually) between 1920 and 1950 will go for $750,000 and up.  And then rent out for $2750 - $3500 a month.  Which does not give you good neighbors - it gives you nervous neighbors and/or neighbors who make a load of money doing things you don't want to examine too closely.  The good ones go to Mission Hills or (if extremely rich) Rancho Santa Fe.

    It is putting big holes in the community, but the corporations don't care.  And the selling prices continue to spiral up, which is actually a bad thing.  it drives people out.

    I am not religious, and did NOT say I enjoyed sects.

    by trumpeter on Thu Nov 14, 2013 at 02:02:39 PM PST

    •  San Diego house prices are ~$60K below... (0+ / 0-)

      their pre-great depression high. $530K then and ~$470K now according to zillow. Looks like nice areas (Rancho Penasquitos) are now about the same as pre-depression @ ~$630K.

      San Diego's housing problems are aggravated by really nice weather, nearby beaches and mountains.

  •  Setting the stage for serfdom (2+ / 0-)
    Recommended by:
    MNDem999, kkjohnson

    The current market is bad enough when everything is above board. In Minnesota, a company called Invitation Homes, which is backed by the Blackstone Group, has bought about 600 single-family homes in the Twin Cities area in the past couple of years. There are a multitude of smaller scale cash buyers/investors also operating in the market.

    The result is that prospective homebuyers with mortgage financing who just want a place to live in are frequently losing houses to cash buyers even when they are willing to match the offer. Is it illegal? No. But taken to its logical conclusion it has some pretty scary implications.

    What if we get to the point where the predominant means of buying property is with cash? Imagine a scenario where if you can’t write a check for six figures you will never own a home. People won’t ever have that real asset owned free and clear. They won’t have wealth in the form of home equity. All of that wealth will accrue to the rentier capitalists because that’s what the rest of us would literally be: renters.

    Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. - Groucho Marx

    by Joe Bob on Thu Nov 14, 2013 at 02:33:02 PM PST

    •  don't worry (0+ / 0-)

      this ponzi scheme of fiat dollars created out of thin air by corrupt moneychangers and politicians will disintegrate as ALL fiat currencies have throughout history without exception.  

      "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

      by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 08:32:25 PM PST

      [ Parent ]

  •  Nothing surprising here (2+ / 0-)
    Recommended by:
    MNDem999, FreeTradeIsYourEpitaph

    The same government that allowed if not encouraged these banks to make billions gambling on the real estate market and in doing so collapse it, then bailed them out with taxpayer money, failed to prosecute a single high-level bankster, and allowed them to continue their high-stakes gambling and make yet more billions producing almost no value to the real economy, is now allowing them to swoop in and buy up all that undervalued real estate that they caused to be undervalued through their reckless high-stakes gambling, so they can start the process all over again.

    By design.

    Criticize "free market" ideology all you want but that's not what's made all this happen. That was always a cover story, sold as neoliberalism to Dems and conservatism to Repubs. What made all this happen was a system that was gamed by design, for the unearned profit of a few, not ideology. Winner takes all, loser takes nothing, the ultimate Ponzi Scheme.

    It was always about the profits.

    "Reagan's dead, and he was a lousy president" -- Keith Olbermann 4/22/09

    by kovie on Thu Nov 14, 2013 at 04:56:07 PM PST

    •  exactly (2+ / 0-)
      Recommended by:
      kovie, WheninRome

      they call free trade schemes 'free markets' when in fact it is very far from it ... they are actually monopolization schemes wiping out domestic competition by using foreign labor markets.   The latest TPP is actually a protection racket for US corporations that will sue the US govt to protect their intellectual property as they sell their shit into the US markets from foreign countries killing any domestic competition that may possibly rear its head.

      "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

      by FreeTradeIsYourEpitaph on Thu Nov 14, 2013 at 08:37:30 PM PST

      [ Parent ]

      •  I feel like I need a break from looking at (1+ / 0-)
        Recommended by:
        jsquared

        all this corruption or else I'll go mad or give up in despair. I feel like I need some distance for perspective and hope because right now I don't see any way out of this loop. They own the system and the people who run it and no one has the money to compete with that, and the only people who can fix it are the people that they own. There are some who haven't been bought, but they're too few right now and I don't see how to sufficiently increase their numbers to make a difference. Perhaps some of the others will have a crisis of conscience. Or maybe we can replace them with uncorrupted Dems.

        Where's OUR "tea party"?

        "Reagan's dead, and he was a lousy president" -- Keith Olbermann 4/22/09

        by kovie on Thu Nov 14, 2013 at 09:05:11 PM PST

        [ Parent ]

        •  . (0+ / 0-)

          I know Kovie, I know exactly how you feel.  I have been there for awhile now (since 2003 before Obama and nothing changed after he was elected, never liked him anyways wanted Kucinich or similarly deemed 'unelectables').

          So if you happen to read some comment I write somewhere on this site about hanging bankers or dissing hillary or obama or regulators ... you know where I am coming from.  I despise this 'system' and my sentiments about democrats is barely higher than that of the 'opposing' party... yet I still get a lot of shit here for it amazingly but less than I used to.  I don't see 11 level chess at all, I see only corruption.  I expect only bad things from it all because I can't see anything else being the end result.  

          I seriously considered voting for Romney simply to get it thru republicans' heads that all the political system is corrupt not just the democrats but I had a sister pleading with me to vote for obama because she thought obamacare would help her at some point.   Its a pretty sad state of the union in my opinion.. I can't even listen to a minute of obama speaking like I felt about bush.  Eloquence and nice smiles don't make up for corruption , hidden agenda's and  series of words constructed simply as platitudes for ignorant adoration and support from clapping lemmings.... reminds me too much of conservatives when the other asshole was in office.

          "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

          by FreeTradeIsYourEpitaph on Sun Nov 17, 2013 at 01:49:31 PM PST

          [ Parent ]

          •  Such is the dilemma faced by all progressives (0+ / 0-)

            The dual loyalty is hard to maintain at times, especially when Dems act like Repubs Lite, or simply fail to act like Dems of old. The alignment between the party and progressivism was never complete. Once it was the Dixiecrats, then it was machine politics Dems, now it's neoliberals. The left can't win without Dems, but it doesn't seem to be making enough progress with them. I think it needs to keep working with them, but by being a bit more adversarial.

            Meanwhile, this site serves as a great vent hole. :-)

            "Reagan's dead, and he was a lousy president" -- Keith Olbermann 4/22/09

            by kovie on Sun Nov 17, 2013 at 06:22:15 PM PST

            [ Parent ]

  •  In Wake County, Raleigh, NC (2+ / 0-)
    Recommended by:
    MNDem999, Notreadytobenice

    I just did a records check of the real estate property - OVER 200 houses have American Homes 4 Rent JUST IN WAKE COUNTY..  I saw one house in a VERY NICE NEIGHBORHOOD - Kitt Creek in Morrisville - that is near Research Triangle Park on their website for rent for $2300...  They bought the house for $273,000 and the tax value is $406,000.  

    Why do Republicans Hate Americans?

    by Caniac41 on Thu Nov 14, 2013 at 06:16:02 PM PST

    •  Is the tax value close to market value... (0+ / 0-)

      According to zillow, Raleigh home prices are almost back to their pre-great depression highs. You can enter that house address into zillow and see zillow's estimate; what it sold for and tax value over the years.

      Sometimes tax value is a lot higher than market value. Doesn't matter if all the houses are in the same boat.

  •  Great diary, 999...making a lot of us (2+ / 0-)
    Recommended by:
    MNDem999, Notreadytobenice

    sit up and take notice...rec'd and tipped!

    "Inmates should be reformed - not recycled" http://piecp-violations.com/

    by Bob Sloan on Thu Nov 14, 2013 at 06:39:30 PM PST

  •  If Wall St. Banksters are in on it, (1+ / 0-)
    Recommended by:
    MNDem999

    then whatever 'it' is is crooked.

    Obviously they have a kickback scheme going on between the people managing the foreclosure sales and the investment companies buying the houses, this will cheat the foreclosed family out of a fair auction price for their home.  But there has to be more than this going on.  They're going to do to the rental housing market what payday lenders have done to small loans,  or something even dirtier... who knows what those evil bastards are cooking up.

    190 milliseconds....

    by Kingsmeg on Thu Nov 14, 2013 at 07:13:33 PM PST

  •  What? Corruption by money in the richest country (0+ / 0-)

    in the history of humanity? How could that MONEY happen MONEY more and more MONEY with so many MONEY being involved MONEY and nothing is MONEY being done to MONEY stop it?
    Money corrupts. Excess money corrupts excessively. In a free-spending, consumer-based, anything-you-desire-can-be-bought society, what did you expect? Morality?

    Ash-sha'b yurid isqat an-nizam!

    by fourthcornerman on Thu Nov 14, 2013 at 08:19:01 PM PST

  •  Did you hear the one about (1+ / 0-)
    Recommended by:
    MNDem999

    how they are then 'bundling' the rentals and then selling them as securities to investors?

    I am not making this up...

    In one of the surest signs that the home-rental business is going corporate, the area's biggest new landlord has started bundling rent checks from tenants and selling them as securities on Wall Street.

    Blackstone sold $479 million worth of bonds backed by its home-rental income

    Loyalty to petrified opinion never yet broke a chain or freed a human soul in this world--and never will. Mark Twain

    by whoknu on Thu Nov 14, 2013 at 09:01:35 PM PST

  •  Noun or verb? (0+ / 0-)

    Why does Real Estate want to "flop" The News Corporate Screw Job?

    "You can't run a country by a book of religion. Dumb all over, a little ugly on the side." Frank Zappa

    by Uosdwis on Thu Nov 14, 2013 at 09:10:31 PM PST

  •  It's definitely happening in CA. (2+ / 0-)
    Recommended by:
    MNDem999, Notreadytobenice

    48forEastAfrica - Donate to Oxfam> "It is better to light a candle than to curse the darkness." Edna St.V. Millay

    by slouching on Thu Nov 14, 2013 at 10:15:54 PM PST

  •  Firesale America: Food, Water, Power, Housing, (3+ / 0-)

    Transportation Infrastructure, Information Dissemination, Voting, Parks & Rec, etc.

    Barriers to entry and pricing legitimate business out of markets, this kind of massive hoovering up of resources and capital is epidemic and is strangling the country.

    Public property, policy, and influence are on the wane or on the chopping or auction blocks. This is just another symptom of a scummy and perverse economic model.

    Democracy - 1 person 1 vote. Free Markets - More dollars more power.

    by k9disc on Thu Nov 14, 2013 at 10:37:28 PM PST

  •  Tipped and recced. But I'm puzzled by a basic (0+ / 0-)

    question--why would a seller of a house sell for a 50K discount to one buyer when he had a full-price cash offer from another? That doesn't make sense, and the diary really does not explain.

  •  Where is the mystery? 3rd shoe of the scam.... (0+ / 0-)

    Anyone who paid attention during the S+L "crisis" realizes now it was a massive scam, a "conspiracy of common interest" on the part of hundreds of thousands of real estate and investment scammers.

    Here, in the new scam, you provide millions of home loans you know will ultimately fail, and to make sure you actively tank the economy to push them over the edge.

    You bundle the crap loans and sell them to idiots overseas, and take all that money and sit on it, waiting, waiting.

    The economy collapses, speeding the demise of the millions of family budgets leading to millions of foreclosures and a flood of cheap empty residential real estate.

    You finally sweep in and buy everything in sight at a major discount.

    Set yourself up as a rental near monopoly to scam the now homeless former homeowners and suck them dry, while they desperately try to build their finances back up to once again buy a home.

    Which you will gladly sell them, after buying up the bulk of the inventory to drive prices way up for maximum profit.

    The information and internet/computer revolutions have not just helped mere people, they have helped the wealthy and unscrupulous operate scams on scales unimaginable until now. Millions of homes, millions of families getting re-victimized over and over. Stealing and raping people's finances in ways that just weren't possible until the 21st century.

    If you step back far enough you can see the entire scam, just keep an open mind that people CAN BE that sinister, and you will see it clearly.

    We have no functioning governments, so the last line of defense, to stop such massive scams simply do not exist now. The scammers first act was to corrupt the governments and deregulate the oversight so they can operate with impunity.

    Just as they did during the S+L scam. The US Government has been gutted to the point that even the protections under a corrupt Reagan admin are gone, and there is no oversight .... the oversee'rs are now blind.

  •  the Realtor said "leave it alone". (0+ / 0-)

    That's your first clue that said Realtor is in on the game.....

    Most Realtors work on a commission basis.  I'm guessing the going rate is 6 - 7% of the final sales price.

    6% of $40,000.00 is $2,400.00.

    And the "leave it alone" Realtor doesn't have an issue with that?  

    I call Bullshit!

    My guess is that "leave it alone" Realtor is on the take somewhere on the back end of the deal.  Really, in today's economy, who doesn't worry about $2,400.00.

    And on another note, what about the seller of the property?  Does the seller know that there was a better offer available? How would you feel if someone you were paying to sell your house sold it for $40,000.00 cheaper than the next offer.

    The whole world is corrupt!

    "The first duty of a revolutionist is to get away with it.". Abbie Hoffman

    by Joes Steven on Fri Nov 15, 2013 at 10:01:41 AM PST

    •  Your guess is wrong (0+ / 0-)

      It's 6% split between buying and selling agent.

      Besides, it's simple: That selling agent gets a lot of business this way. Another $200k listing is more lucrative than squeezing $40k out of this one.

      The paranoia here is amusing to me.

      •  You must be in on the scam....... (0+ / 0-)

        I'm not paranoid.

        The seller of the home received $40K less than was available.

        How do you square that?

        "The first duty of a revolutionist is to get away with it.". Abbie Hoffman

        by Joes Steven on Sun Nov 17, 2013 at 07:16:28 AM PST

        [ Parent ]

        •  Yes, we're ALL in on it (0+ / 0-)

          C'mon...

          The seller in this case was a bank. Supposing after the foreclosure-thon they have been on, the bank owns many homes. If you were in that position, and you could sell MANY houses on your books by giving a $40k (20%?) discount, wouldn't you do that? Yes, you could probably make more if you sold piecemeal. But this is regular old bulk pricing at work.

          You see it differently?

          •  I don't see it differently........ (0+ / 0-)

            and I don't think you should waste your time trying to.

            The entire housing bubble was a scam, this is a continuation of the same scam.

            And as long as all involved - Realtors, Mortgage Brokers, Appraisers, inspectors, etc are getting their cut it will continue.

            And what about the neighbors of the property that was sold for $40K less than it cold have received?  Do you think their property value was lowered by this "discount"?

            "The first duty of a revolutionist is to get away with it.". Abbie Hoffman

            by Joes Steven on Sun Nov 17, 2013 at 11:42:23 AM PST

            [ Parent ]

            •  Yes! (0+ / 0-)

              Yes! it was lowered! that's the point dude! Re-read the diary. it goes like this:

              1. Bad guys buy up houses at discount
              2. Bad guys keep houses off the market driving up prices
              3. Bad guys sell for profit

              But it doesn't work that way! By buying at discount it pushes prices DOWN -- including for THEM at resale.

              Man you seem to be tied UP about this

  •  Henry F Potter is alive (0+ / 0-)

    and creating as many Pottervilles as possible in the current market.  How many of those HF Potter corporations are foreign-owned or controlled?

  •  Double Bubble Trouble (0+ / 0-)

    Wall St inflated the first housing bubble that many got sucked into. Wall St deliberately burst that bubble leaving many of the 'suckers" homeless or heading there. Wall St is now profiting from the housing bubble Wall St built and burst. The toxic mortgages and foreclosures weren't the plan, they were just part of a plan which is now seemingly coming full circle.
    Sell the house at inflated prices, deflate the prices and kick out the buyers. Buy back the house cheap and sell it again at inflated prices. Then do it all again.

  •  You Article on Home Price Manipulation is Spot On (0+ / 0-)

    We went through losing our home--my business failed and my husband was laid off at the end of 2008.  It has taken us 5 years to climb out of the hole and we're more than the lucky ones.  We have been in rentals, but now have bought a home for ourselves.  We paid $240,000 for something that I think should have been $200,000 here in Orlando, FL.

    What is happening here comports with your article, but it seems more like price fixing.

    Banks are holding back properties from going on the market in several ways either keeping them in the pre-foreclosure, foreclosure, or just holding even after foreclosure final judgment.  Why?  Banks keep the asset on their books at the inflated final judgment amount, so they have keep less cash on hand while also keeping the inventory of homes on the market low to push prices up.  Central FL is great proof where there so many homes vacant, in foreclosure, and/or foreclosed with residents remaining in the home.

    Second, when the banks do put homes on the market, they price them high (minimum top end of the appraised value) and will not negotiate.  Most of these homes are 'as is' and some are auction terms.  Auction terms means you buy without getting to see the inside and no inspection to reveal issues that would make you not buy.   Only the wealthy or an investor can take kind of risk.  

    So, I agree there is a lot of flopping, it is worse than that.  The banks are consciously manipulating their books and the real estate market.  They don't have to talk to each other to be an oligopoly.  They are and need to be broken up, due to price fixing, market manipulation, financial books fraud, and because it is so scary how big they are.  They are way beyond too big to fail.  Breaking up the banks also has a silver lining by creating middle and upper management jobs.  They won't be less competitive with other countries' banks as they will immediately say.  They will likely be more competitive because they are closer to the money.  The farther away from the money a human being is the more risk and fraud based on many behavioral economic studies.

  •  Renters Beware (0+ / 0-)

    These firms are buying and renting houses sight unseen. Many are in a state of mild to advanced disrepair having been empty for years; or occupied by families unable to afford repairs. The new owners, e.g., the banksters, don't know about the problems and they don't care. Banks were never set up to handle property management issues. So it's the renter who winds up living with bad wiring, leaky roofs and plumbing, HVAC systems that don't work, etc. And who are they going to call for help, Jamie Dimon?

  •  The return of Lords and Lady's (0+ / 0-)

    Corporations no longer think of themselves as just Businesses but instead as Small Countries ran by basically Dictators. The Housing Market Crash caused by Wall Street was intentional so that they could snap up property at very low prices that this article talks about after making tons of money off of high interest rates before the crash. I knew what happened in 2008 was going to happen because of what President Reagan did back in the 1980's of coarse I thought it was going to happen in 2007.
    President Reagan thought of himself as a King and re-established Royalty in this Country and now we see the U.S. Supreme Court helping this along with the Wealthy/Royalty buying our Elections.
    Trickle Down Economics have been used for Centuries by the Royalty of EVERY KINGDOM on this planet. How do You think Royalty always stayed in power and now the U.S. Supreme Court has betrayed every Citizen in this Country by it's Traitorous Actions.

  •  Downfall (0+ / 0-)

    Eventually, all the tricks these financial types try will backfire on them - they won't have anything left to jimmy, jack, or screw with, so the whole house of cards will come crashing down with no remedy possible.

  •  "Flopping" is criminal conspiracy... (0+ / 0-)

    ...or should be.

    The type of collusion discussed in this article should be deemed a crime of conspiracy (at the very least) that can be prosecuted under federal racketeering (RICO) laws.

    Schwartzman and his ilk belong in federal prison.

    Also: Congress should impose a steep excise tax on residential real estate transactions by entities that own more than (say) 100 residences, excluding rental apartments.

    Shut down this greed machine NOW.

  •  Now look at this one (0+ / 0-)

    http://www.care2.com/...

    Great Western allowed the homeowner to list it and then foreclosed so they could flop it TO THE SAME BUYER.  I call that getting caught, and they will be big time sued, and I hope and pray with all my strength they will big time lose, but I certainly don't guarantee that.

  •  greed (0+ / 0-)

    Just like when they have cornered the markets  on a commodity then driven the price up.

    The little guy will get hurt.

    OWS was right.

  •  Little understanding here of the housing market (0+ / 0-)

    I'm a software engineer and analyst at a big, popular real estate website. I don't know everything about the housing market, but I'm not noob either. My first job in school was doing research for a RE appraisal firm, I've bought and sold several homes as an investor and homeowner, and my major in school was Economics.

    First, let me be clear: I'm not asserting that this isn't happening. Houses are assets. Assets can be investments. As an investment class, houses in some markets are depressed. If you have billions of dollars you don't need right now, and are willing to wait it out, it's a good investment. And honestly is better for the economy than investing in some far-flung derivative.

    Lets hear some counter points, because honestly much of what was written here borders on nonsensical to me.

    1. Buying a bunch of houses in a single market will depress prices. A sale makes a comp. Appraisers use comps (and only comps, adjusted for things like home condition) to determine a price. The appraisal industry was taken to the woodshed after the crash and is run differently now. So if you go to buy a house in one of these markets, the appriser you hire will use these comps and, if they are universally as low as suggested, your potential abode may not appraise for what you offered on it. Your bank will not lend in that case. You, the buyer, will need to either make-up the difference between appraisal and offer in cash, or use your appraisal contingency to force the seller to reduce the offer or you walk away.

    2. These investment banks don't NEED to buy below market. The market is already depressed. Yes, it's reasonable to assume a bank might give a discount to a buyer that is taking many homes off its balance sheet. 5, 10% yes, 50%? I wouldn' t be so sure. Maybe it happened, maybe not, but it's foolish to project that as the rule and not the exception.

    3. Suppose somehow I'm wrong and this is magically driving up prices of homes. THAT IS GOOD FOR HOMEOWNERS. GOOD FOR THE MIDDLE CLASS. Yes, for first time buyers, it can be more difficult to break into the market. But the vast majority of buyers are not first time buyers. And if you're selling a home for a premium and then buying for a premium, you're not an unhappy person.

    Look, all I'm saying is, there is a lot of chicken-littling in this comment thread that makes me understand why R's roll their eyes at the lack of understanding of business and the market amongst many progressives.

    I live in San Francisco. In addition to having to struggle with a CRAZY housing market, I'm a blue guy in one of the bluest areas of the country. I'm just offering some counter-points to this diarist.

    And I'm not joking about the market here. Houses here routinely sell for 20% OVER asking. My first home? Over $700k. For 983 sq ft plus a detached studio in Berkeley. I bought it with 4% down, FHA.

    •  Nonsensical shaneh? (0+ / 0-)

      Congratulations on you education and achievements.

      Mastering the game does not therefore make the game right?

      Those w/cash as king tend to rule the day.

      Does this seem ok to you?

      While many falter by design, other's prosper?

      I can tell you first hand especially w/manufactured housing making up a large portion of foreclosed homes they are selling to cash buyers at discounts up to and above 50% and it is the RULE. Remember Country Wide?

      #1. Cash buyers care Nothing of comps as they need worry mainly of rental income potential. The market had already deflated to the point cash purchase for rentals made perfect sense for the best ROI as cheap money for the Few is available but paying returns of less than 0 when inflation adjusted. I think you know this w/your degree? Are you playing Devils advocate? or, Creating doubt for the benefit of the Eye Rollers?

      #2. Investment banks again as you know as individuals w/cash do not buy out of need but Greed and will leverage the best deals for themselves and investors regardless of families and individuals wanting their American dream and climb out of lifelong debt while enriching others while renting rather than owning. As again you know?

      #3. Selling a home for a premium and buying a home for a premium? Not an unhappy person? Is this on topic?
      Chicken little says, Opportunist who contributed to the Greatest Recession in our 238 year history should not again
      Prosper over and above those of lower privilege?

      Maybe your self proclaimed meager beginnings explain more truth than your supposed curiosity of our current housing matters?

      It is hard to walk in another's shoes when your's fit so nicely? Regardless of Red or Blue.

      Live simply so others may simply live.

      Enjoy your day  

      Fox viewers seek a mascot for solidarity? Maybe an Ostrich? Seek Truth young birds....

      by Jon Sullivan on Sun Nov 17, 2013 at 01:16:32 AM PST

      [ Parent ]

      •  I don't think you get it (0+ / 0-)

        I'm middle class here, just like somebody who buys a $150k house in my home state of Ohio is. But here I had to swim hard against the tide of an insane housing market to be able to even own a home. If I'm the enemy to you, you must be a man with a lot of enemies.

        Most of the rest of what you say hardly makes sense to me. Of course the cash buyers don't care about appraisals and comps. But their purchases WILL BE COMPS for the larger portion of the market -- regular joe homebuyers.

  •  according to plan (0+ / 0-)

    After 911 Bush 2 had a plan to create more homeownership for security reasons. Knowing Homeowners where more likely to defend our mother land w/a vested interest many set out to accomplish this goal.

    As they began to develop their plan, Wall street and it's investors as always seen opportunity and Greed became the motivation.

    Lets remove regulation and reason while offering exotic loans to people w/little market knowledge? A sort of loan for a home w/a hook? Well call it an "Adjustable Rate Mortgage" ARM's or maybe a "Interest Only Loan" and,,, while where at it lets offer something called a "Home Equity Line of Credit" HELOC's so everyone can get in on overextending themselves for the greatest wealth redistribution in AMERICAN history and possibly the world? But,,, how will we keep the ball rolling w/o tying up our cash? Well,, everyone in the world knows the Americans are so smart and they are the great consumers lets promote the idea that housing prices always increase and sell these loans around the world to other trusting countries as  "Colateralized Debt Loans"  
    'CDL's?

    We'll Pretend when it all blows up that where not the most brilliant minds in the world at Goldman Sachs w/our multi million dollar bonuses and even maybe make a few Trillion betting against our own unsuspecting Muppet investors while the walls come crashing down?

    Oh and who will pay for all this Mayhem when the chit hits the fan? Well the little people of course. Well give ourselves a tax break, hoard all our ill-gotten gains off shore and socialize the losses letting Government (You and I) pick up the tab
    and then petition for Repatriation to bring it all back and buy up more of America for our Entitled FEW?

    But,,, Wont the people revolt? Nahh well hand out gimmick's
    like Free flyer miles and cash back to anyone who matters to keep the minions content and extend another helping hand to the Majority w/low interest credit for a Short Period of time at 12+% or maybe an opportunity to refinance their homes starting their mortgage all over again at a lower rate?

    Perfect, a Debtor, Renter, 3rd world, Nation right here at home to cater to the needs of the FEW?

    After all, it's Their fault they should have saved for a rainy day???

    It is hard to put yourself in another's shoes when yours fit so nicely?

    Of course we can just trust them to do the RIGHT thing?

    Fox viewers seek a mascot for solidarity? Maybe an Ostrich? Seek Truth young birds....

    by Jon Sullivan on Sun Nov 17, 2013 at 12:24:08 AM PST

  •  Remind me (0+ / 0-)

    Tell me again, why do we persist with this rigged, "free market" system when it is all too clear that the masters, who are supposed to trickle manna upon we lowly believers, have proven to be the profiteers of misery?
    There is absolutely no reason for them to improve our economic situation when downturn is more profitable for them.
    They own our government, soon they will own us.
    Let the repossession begin!

    "To succeed in life, you need two things: ignorance and confidence." - Mark Twain

    by CaptainAnalog on Sun Nov 17, 2013 at 03:29:28 PM PST

  •  housing scam (0+ / 0-)

    The more and more I read about these types of things, the more and more I hate being a "human".  The only "true humans" are those that possess something of a heart.  I truly believe we are in for a revolution, one that will be all too warranted.

    •  It's Not about Being Human (0+ / 0-)

      Despite Mark Twain's characterization of "the damned human race", this kind of thing is not the necessary result of being human.  It's about "they have investors who want to see a rate of return", a system that puts the interests of investors ahead of the interests of workers, customers, and the rest of the human race.  In other words, it's about capitalism.

      The Russians gave the alternative a bad name for generations, but now we're beginning to notice that the bad stuff was more about Russia than about socialism, and our Millennial generation is starting to wake up.  Not to all-out Communism, of course, but to a social democracy that balances the needs of all of society.

  •  Real Estate Flopping (0+ / 0-)

    All the people who are denied the opportunity to purchase a house because of the greedy banks should organize a class-action lawsuit.  Seems to me that they are being denied some basic tenets of our glorious capitofascist society.  You know: life, liberty, pursuit of property.
    These are the people who can take the banks down because they would be very interested in passing laws that allow only local banks to offer home mortgages.  Which is how it should be.
    Peace and Love
    Surpreet

  •  Ran into this last year (0+ / 0-)

    One of the three houses I bid on went to somebody who bid way less.  At the same time, every single house my ex bid on went to a buyer with cash.  

  •  Let them eat it (0+ / 0-)

    Blackstone, Blackwater. Why is that some of these companies just have evil sounding names?

    Research who owns the house you are interested in. If it one of these companies, move on and keep looking. Spending a hundred million a week, eh? Good. Let them eat it.

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