Tuesday, June 4, 2013

Wall Street is saving the housing market and the economy!! Reminds me of the arsonist who sets the fire then puts it out. I GUESS we are thankful. Read here why...

NYTIMES
If you are interested in "going deep" with your knowledge of various underlying fundamentals contributing to our economic recovery, here is an article that explains the role BIG Wall Street investment firms are playing in housing markets that were the MOST adversely affected during the Great Recession.

"...The last time the housing market was this hot in Phoenix and Las Vegas, the buyers pushing up prices were mostly small time. Nowadays, they are big time — Wall Street big.
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. Some are already wondering if prices will slump anew if the big money stops flowing....
Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states. Colony Capital, a Los Angeles-based investment firm, is spending $250 million each month and already owns 10,000 properties. With little fanfare, these and other financial companies have become significant landlords on Main Street. Most of the firms are renting out the homes, with the possibility of unloading them at a profit when prices rise far enough.
This is a good thing, for the most part. But it is difficult to not be a little cynical, at least for me.

Interesting twist. The institutions (not necessarily the SAME ones) responsible for the run up in housing prices and subsequent bust are now aiding in the recovery of the housing market in the hardest hit areas.

Reminds me of the arsonist who sets a fire then comes in and saves the day by putting it out and rescues people.   They might consider themselves a hero but  they are still an arsonist at heart.
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