More homes could be dumped (real estate, 2014, condo)

[tankhead]

According to this article, there is speculation that a lot of home could be on the markets by institutional investors.

Wall Street investors have 13,000 homes they could dump on the South Florida market - South Florida Business Journal

[Winchupuata]

Hu, I don't get it, wouldn't dumping thousands of houses make their price crash? Why would they do that? I'm sure these investors are smarter than that.

[tallrick]

Subprime is back, so they are already dumping those homes. All the ones in my mom's neighborhood have been sold and prices have been going up. They pump, dump wait, crash, buy cheap, pump and dump into eternity. As long as the Fed gives free money to hedge funds they can sit on those properties till they rot.

[Sugah Ray]

The home right next to my house was bought by one of those large investors two months ago so I guess the purchasing is still going on. I thought they overpaid for that house but they bought it without seen it because my ex-neighbors were still living there, they were evicted by the investor. My ex-neighbors were hoarders and were incredibly dirty(weirdest people I have ever met, they looked like normal people but lived like animals). The investors have been fixing that home for weeks. I don't know how they are gonna make money on that property.

[Winchupuata]

Originally Posted by tallrick

As long as the Fed gives free money to hedge funds...

You really have no idea how the fed works, do you?

[richzimme]

Some of the price valuation in the $150-$250k condo market is the result of big and small-time investors who are buying and flipping. In some cases they remodel and add value. But, in other cases they are just buying an investment (the condo) and selling it into the rising market. My concern is that a fair number of these real estate transactions don't involve a party that intends to live in the residence. When the investors/flippers decide to leave the "poker table" with their money, the market may suffer from the disappearance of these market makers.

[tallrick]

Originally Posted by Winchupuata

You really have no idea how the fed works, do you?

Of course this is a simplification , but the Fed prints money to buy government bonds or real estate mortgage securities. People buy the securities that sell them to the Fed. Banks can create money based on Fed seed money. No matter the process in the end money is created for the financial sector to throw at stocks, real estate and fracking investments and in the end, the Fed finances it all.

[perry335654]

Originally Posted by tallrick

Of course this is a simplification , but the Fed prints money to buy government bonds or real estate mortgage securities. People buy the securities that sell them to the Fed. Banks can create money based on Fed seed money. No matter the process in the end money is created for the financial sector to throw at stocks, real estate and fracking investments and in the end, the Fed finances it all.

Give you some business education for the day

How the Fed Works - HowStuffWorks

[oronzous]

Tallrick has a point

Since the recession, commercial banks reduced their lending (credit crunch), thus reducing the multiplier effect and the money supply.

To counteract this, the Fed DID pumped into the market almost $4 trillion by buying treasury bonds and other financial assets. This increased bonds prices, lowering their yields.

With no tangible returns in bonds market, all that money had to go somewhere. See the performance of S&P 500, commodity markets, real estate, foreign currencies and you will get an idea where the money went. Assets of all kind kept rising their prices, with negligible effect on the employment level.

The end of quantitative easing , coupled with a slower China economy, has already left its mark on some financial markets (commodities, oil and currencies). Stock Market and Real Estate are still going strong, probably because of capital inflows from troubled economies. But it would not be a surprise if they start to show some weakness in the near future.

[tallrick]

Originally Posted by oronzous

Tallrick has a point

Since the recession, commercial banks reduced their lending (credit crunch), thus reducing the multiplier effect and the money supply.

To counteract this, the Fed DID pumped into the market almost $4 trillion by buying treasury bonds and other financial assets. This increased bonds prices, lowering their yields.

With no tangible returns in bonds market, all that money had to go somewhere. See the performance of S&P 500, commodity markets, real estate, foreign currencies and you will get an idea where the money went. Assets of all kind kept rising their prices, with negligible effect on the employment level.

The end of quantitative easing , coupled with a slower China economy, has already left its mark on some financial markets (commodities, oil and currencies). Stock Market and Real Estate are still going strong, probably because of capital inflows from troubled economies. But it would not be a surprise if they start to show some weakness in the near future.

It is reassuring that there are people on this forum with the ability to see the obvious. The stock market and all financial assets move in step with the Fed's money printing, code named QE. If not for the Fed home prices would be 3 times incomes, and affordable. If the Fed had done nothing, the trash would have been taken out of the market and right now we would have a new, prosperous economy from the bottom up. You can bet that as soon as the stock market or real estate starts falling the Fed will start pumping again. They have to do everything to hold interest rates down, or the whole debt bubble implodes.

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