The majority of today’s home buyers are large, highly liquid, private and publicly traded investment firms. The New York Times, pursuant to statistics provided by CoreLogic and Campbell HousingPulse (as supported by Fitch Ratings and industry leaders), confirms that these predominantly Wall Street investors have been successful in Arizona and California. It’s no secret that their latest target is Florida.
Blackstone Group has bought over 26,000 homes in nine states. Colony Capital is spending $250 million every month and now owns over 10,000 properties. It’s brilliant – swoop into markets where the financial crisis was hit the hardest, quietly stake claims to many homes (or in some cases entire neighborhoods), create an artificial price surge, and then capitalize.
I wonder what will happen to home prices when these companies start to sell en masse…
Lately I have been receiving inquiries from people wanting to move back into adjustable rate mortgages (ARM’s). Home flipping is back for people who are focused on the short term: They are buying quickly, riding the price surge wave, financing their purchases via acquisition ARMs, and then hoping to sell in the near term by following Wall Street’s lead.
Well that all sounds interesting . . . if taking risk by timing the market is what you enjoy (and having to unpredictably uproot to another home at any given time).
P.S. With long-term fixed rates still very low (and still only about 1% above ARM rates), I continue to advise my clients to lock-in for the long term.