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Ordinary Americans Priced Out Of Housing: Institutional Purchases Hit Record, Half Of All Deals Are "All-Cash"
If there was any doubt that the US housing "recovery" is anything but the latest speculative play by deep-pocketed (namely those who already have access to cheap funding) investors, who are now engaged in rotating cash gains out of capital markets and into real estate, on their way hoping to flip newly-acquired properties to other wealthy investors, then the most recent, September, RealtyTrac report will put that to rest. To wit: Institutional investors (purchasing 10 or more properties in the last 12 months) accounted for 14 percent of all sales in September, up from 9 percent in August and also 9 percent in September 2012. September had the highest percentage of institutional investor purchases of any month since RealtyTrac began tracking in January 2011....All-cash purchases nationwide represented 49 percent of all residential sales in September, up from a revised 40 percent in August and up from 30 percent in September 2012. In other words, institutional purchases are now at all time highs, with all-cash accounting for half of all transactions!
From RealtyTrac:
“The housing market continues to skew in favor of investors, particularly deep-pocketed institutional investors, and other buyers paying with cash,” said Daren Blomquist, vice president at RealtyTrac. “While the institutional investors are pulling back their purchases in many of the higher-priced markets — places like San Francisco, Washington, D.C., New York, Seattle and Sacramento — they are continuing to ramp up purchases in markets where median prices are still below $200,000 — places like Jacksonville, Atlanta, Charlotte, St. Louis and Dallas. The availability of distressed inventory also makes a difference. For example, institutional investor purchases have rebounded in Las Vegas corresponding to a recent rebound in foreclosure activity there.
So after gobbling up all the real estate in the marquee markets, the Private Equity and other loaded with cash institutions have now swooped on the B and C-grade markets, where they have essentially priced out all ordinary remaining buyers, making sure the mortgage origination pathway remains slammed shut, and assured a lifetime of rental existence for the vast majority.
Here are the other distrubing findings from the RealtyTrac report:
- Institutional investors (purchasing 10 or more properties in the last 12 months) accounted for 14 percent of all sales in September, up from 9 percent in August and also 9 percent in September 2012. September had the highest percentage of institutional investor purchases of any month since RealtyTrac began tracking in January 2011.
- Among metro areas with a population of 1 million or more, those with the highest percentage of institutional investor purchases in September were Atlanta (29 percent), Las Vegas (27 percent), St. Louis (25 percent), Jacksonville, Fla., (23 percent), Charlotte, N.C., (17 percent), Memphis, Tenn. (16 percent), Richmond, Va., (15 percent), Dallas (15 percent), and San Antonio, Texas (15 percent).
- All-cash purchases nationwide represented 49 percent of all residential sales in September, up from a revised 40 percent in August and up from 30 percent in September 2012.
- Among metro areas with a population of 1 million or more, those with the highest percentage of all-cash sales were Miami (69 percent), Tampa, Fla. (62 percent), Jacksonville, Fla. (62 percent), Las Vegas (62 percent), Orlando, Fla., (59 percent), Atlanta (54 percent), Cleveland (51 percent), and Memphis, Tenn. (51 percent).
- Short sales accounted for 15 percent of all U.S. residential sales in September, up from 14 percent in August and 9 percent in September 2012. States with the biggest percentage of short sales were Nevada (32 percent), Florida (30 percent), Ohio (26 percent), Maryland (22 percent), and Tennessee (21 percent).
- Among metro areas with a population of 1 million or more, those with the highest percentage of short sales were Las Vegas (34 percent), Columbus, Ohio (33 percent), Tampa, Fla. (33 percent), Memphis, Tenn., (32 percent), and Miami (32 percent).
- Sales of bank-owned homes accounted for 10 percent of all U.S. residential sales in September, up from 9 percent in August and also 9 percent in September 2012. Among metro areas with a population of 1 million or more, those with the highest percentage of bank-owned sales were Las Vegas (21 percent), Riverside-San Bernardino, Calif., (20 percent), Cleveland (19 percent), Phoenix (18 percent), and Columbus, Ohio (16 percent).
- Annualized sales volume increased from the previous month in 34 out of the 38 states tracked in the report and was up from a year ago in 35 states. Notable exceptions where annualized sales volume decreased from a year ago were California (down 15 percent), Arizona (down 11 percent), and Nevada (down 5 percent).
- States with the biggest annual increases in median prices were California (up 30 percent), Michigan (up 25 percent), Nevada (up 23 percent), Georgia (up 20 percent), and Arizona (up 20 percent).
- Among metro areas with a population of 1 million or more, those with the biggest annual increases in median prices were San Francisco (35 percent), Detroit (34 percent), Sacramento (33 percent), Atlanta (27 percent), Riverside-San Bernardino, Calif., (26 percent), and Phoenix (25 percent).
- Home price appreciation showed signs of plateauing in these top six appreciating markets. In all six markets, the annual increase in home prices was down compared to previous months this year.
Why is the above a concern? Because prices are now rolling over. And if there is one thing institutions know (and hate) - it is being the last one holding inventory. In other words, once the selling, pardon dumping, avalanche begins, watch out below.
After having made housing ridiculous expensive for anyone but other institutions, these same PE firms, hedge funds and REITs are now scrambling for the worst of the worst distressed properties anywhere they can be found:
And perhaps the one chart that puts it all into perspective:
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"Winning" - (for those close to the free fiat money tap anyway) Roll the motherfucking guillotines, absolutely nothing changes otherwise.
Roll the motherfucking guillotines, absolutely nothing changes otherwise.
I appreciate the sentiment, but if people just stopped obeying the sons of bitches, their game would fall falt in mere months.
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."
time to convert your cash into something real...when a bunch of people decdide to do this all at once we have a name for that...
Indeed, could it possibly be that parking your cash in tangible assets is now officially a better course of action than simply using it to embellish your balance sheet? If so, interesting times ahead.
The relationship between Lords and Serfs dates back to Roman times. According to Marx, the power of the ruling class rested in their control of the land. What the US is evolving into is a neo-feudalism, which is nothing more than a modern day version of bondage and slavery.
Soon the Lords will be demanding the Serfs Oath:
"By the Lord before whom this sanctuary is holy, I will to Blackstone be true and faithful, and love all which he loves and shun all which he shuns, according to the laws of God and the order of the world. Nor will I ever with will or action, through word or deed, do anything which is unpleasing to him, on condition that he will hold to me as I shall deserve it, and that he will perform everything as it was in our agreement when I submitted myself to him and chose his will."
Yes but the serfs have guns this time. At least I do!
That's why they are slowly disarming you bit-by-bit. Your children will have less access to arms and your grand-children none. It's been done before again and again and again. Everytime a people is disarmed they are enslaved. Just look at the Russian civil war almost 100 years ago.....
Everytime a people is disarmed they are enslaved and the rest exterminated.
Good sir Alaric, I beseech thy pardon, but surely you do refer to Blackadder, not the craven Blackstone.
Ordinary Americans have been priced out of the housing market for a looooooong time.
Why do you think Subprime mortgage originated and created all the subprime foreclosure crisis ?
Someone has to be the bag holder when houses become too expensive for average Joe 6-pack to buy.
Exactly. What this says to me is -- everything you all believe about Yellen the Print Goddess is true and then some. If the smart money insiders are buying houses in Memphis (after having bought everything in California already), then surely those fiat dollars won't be worth much soon.
The Fed has already tried it. They're continuing to try it now. The problem is that we've hit peak-debt. The only way for these guys to "exit" is to lend someone more money than they originally paid for the house. That's not possible right now -- at any rate of credit. This game has limits. They found the limits the hard way in 2008. Now they're desperately trying to reinflate the bubble so they can play again. But the limits haven't changed. There is a value beyond which you cannot get a person to borrow.
But the really big issue has almost nothing to do with debt. It has to do with demographics. The great baby-boomer die-off is already beginning. The reality is we have a hilarious surplus of houses in this country for which there are no buyers and there won't be any buyers in the forseeable future -- not even in 50 years.
This is an endgame. Housing is dead. D.E.A.D. dead. You can't fight demographics. 80% of all real estate value is owned by boomers. (Not houses. Value). Think about that for a second. Within the next 20 years: 80% of real estate value returns to the marketplace. (Statistically speaking, inherited houses are almost always sold btw. Not lived in by offspring).
So not only are we at peak debt, which limits the number of prospective buyers. But we're at "peak housebuyer" on the demographic front. Checkmate. Game over. Go home, Fed Board. You're fooked.
+100. That's a great analysis. So in your view, it would be better to be a renter? Or own a home but don't expect to get your money back out of it?
I believe the plan is to have millions and millions of minimum wage Hispanics come flooding across the border and buying up all the million dollar houses.
Tylers: Me thinks this issue portends a much worse situation besides forcing ordinary Americans out of the housing market.
All these institutional purchases could be a mechanism for rehypothecation of collateral that amounts to the very same thing as the sub-prime mortgage black swan disaster a few years ago.
Here's the thing about a house, like many other physical assets, as collateral. First, one must have possession of the house. Second, what is the neighborhood like (of course with mark to fantasy accounting this might not matter)?
Fuck it, I think only one rule applies now to all your investments; when fraud is the status quo, possession is the law.
Yes, and renting single family homes is a fool's errand.
That is more true than ever, since more fools are rushing in.
There's really only one thing that all this value is hung on: the rating of the schools near a given property.
Insane when you think about it, but that's about all that's left. For now...............
Yes, convert those paper promises in real assets and get your tribe in order.
They voted for Obama twice, a man who has never done anything real and has no accomplishments on his pre-presidential resume. How will such people come to discern the game and quit it? Sorry, the game must quit them for them to even gain a scintilla of a clue.
FORWARD SOVIET ASS NAPKINS!
Gotta save up here. Need to buy healthcare or pay a fine.
Justice Roberts sez so.....it's kinda the law.
Don't have a lot of money left over for fancy crap.
it's kinda the law.
Fuck the law - it usurped justice a long time ago.
Exactly...mother fuckers r to dumb or just to fucking afraid...
Just stop complying....withdraw as much as humanly possible from their debt, slave driven paradigm. ...FOR FUCKS SAKE PEOPLE!!!!!!!
"Laws" that cannot be enforced are not really laws at all.
Heartily agree! Despite being in compliance for living (ugh, I know but it is a biz I own, at least)...I have exclaimed to all that I can: "Do not comply - we must starve the (insert bullshit here) beast and it will die!"
That maggot could have dealt a death blow to Obumblecare, yet now it is the law.
He was backmailed by TPTB and caved in. They had the "goods" on him, whatever that may be we'll likly never know.
There is nothing "benign" about this trend. There is an evil purpose behind it.
Healthy recovery!?!?!?
Listen, don't anyone imagine that there has to be a "rotation" out of the stock market to go into real estate. There's enough printing for EVERY market to go up! Weeee!
Inflate that housing bubble again to let it burst. The Fed won't intervene, they love these housing bubbles.....and love them more once they burst. I'm keeping my eye on printer cartridge orders from suppliers so I know when there is a big order, the current housing bubble will pop.
can the economy run on rich people selling to and buying from eachother?
can the economy run on rich people selling to and buying from each other?
It can, so long as the abused never do anything but complain.
They will be enslaved as long as they comply. If they comply forever, they'll be enslaved forever.
Not if they are investing in rental properties. As someone else said the housing bubble will crash and this time the middle class won't be holding the bag. Maybe the Federal givernment will start buying to bailout the future rich bag holders.
Think of it this way. Nearly half of all purchases are cash from big money investors. The other half are people who buy these properties from said investors. Flipping is back but now the only players are people with money. These guys have full time contractors who go from one house to the next.
When everything becomes a rental, Daddy Warbucks will be able to set the rent wherever he wants, just like insurance companies setting rates.
You can't have a crony capitalist debt serfdom regime without a monopoly and eliminating the individual as competition, now can you?
Right, eb. All about owning EVERYTHING!
It's true the rent can be set at any price, but if people can't afford it they won't get renters.
EBT/Food Stamps, SS disability, Section 8, Medicare, Food Pantry, Welfare, WIC.
It's part of the feedback loop of the .gov/crony capitalist/banking cabal.
Account management by the J.P. Morgue and Wells Fargone of course.
At some point it might hit a snag; that's what all those bullets are for.
They will get squatters.
The mortgage deduction will be converted to a housing allowance -- just like in Europe. Blam -- another way for Fed script to flow to the Treasury and then straight to the banksters.
".... the latest speculative play ...."
Isn't the time of speculation over ?
Isn't it time to consider this development as a more lethal move against the republic ?
Quelle surprise! Great article.
So the question is: Is owning a house really better than renting for an individual? It depends on whether we are in a real estate appreciation or depreciation market. It's not always the same answer. If prices are falling, renting is better. Imagine that. Conventional wisdom fails again.
Also, what does one do if they hold an investment property or two? Cash out now or let it ride?
The rich, and only the rich, are getting what they want as usual. Will their sock puppets in DC shut up now?
and once they own enough of the residential properties it will be necessary for local towns to give them special real estate tax breaks so that they can pass that on to the sub human renter class.
Again, just like in Europe. Owners of low-income housing get fat breaks on VAT taxes. The banksters can also be incented to tear down tracts of the wrong kind of housing -- single fam on "inefficent" quarter acre lots -- and build (with a subsidy, natch) scads and scads of high-density tenements for the proles. It is all right there in front of you, folks.
Exactly, they aren't buying the homes, they are buying the land.
Apparently, the elite takes care of the elite... and the rest can slowly starve.
FedFUBAR.
It is a good thing individual buyers are being priced out. When the housing market has another inevitable correction soon, those buying them today on mortgage will be left high and dry. This is an absolutely bad time for anyone to get into homes or stocks.
It's not my FIXED 4% mortgage I'm worried about. It's the theft of never ending increases in property taxes.
My parents property has been paid off for many years. Yet their property tax bill almost as much as my mortgage. Eventually, they will be taxed off what was once part of my Grandparents farm (70+ years of ownership).
I used to think owning was better than renting because my annual cost was known. However, owning property in deficit running localities has become a license for government to steal from you. Once you own it, they can tax you at whatever rate they want.
Lets see, banks have a record amount of cash on their books due to QE. They also have a record number of foreclosures on their books. Could this be a match made in heaven which is skewing these published results?
Ordinary Americans Priced Out Of Housing...
Hmmm, ordinary Americans priced out of employment, education, medical care.
Today's WSJ:
Ordinary Americans priced out of small business loans, pawnshops thrive:
http://online.wsj.com/news/articles/SB1000142405270230438410457914186403...
All of the above cases this are the direct result of the unintended (but not unforeseeable) consequences of government fueled credit and government regulation. The evil banks and institutional pools of money are simply responding to incentives.
Watch: when PE starts dumping inventory and RRE prices plummet the Feds will step in and “do something” to buoy the market.
Interesting. Dovetails with what several small biz owners have told me in the past year. Banks have zero interest in lending them money, but what they do do is try to line up and "equity partner" for them. Yep, investment banking for mom-and-pop.
Banks no longer have any legitimate function.
Thanks, Ben.
Evil banks simply responding to incentives?
Wow, way to whitewash their behavior. The devil made them do it! Because, you know, incentives alone always force you to do things. One time there was a sale at Penneys, so I stole my neighbor's car to drive there. Later, in the food court, I thought how much better a free sub would be so I punched out the cashier. Then it was kind of cold and there were some dry trees in the parking lot, so I used them to set the whole building on fire. Don't blame me, I was minding my own business until those incentives came along and made me do those terrible things! Hey, when's the next sermon on personal responsibility? They should let me give it this time; I'm at least as qualified as any of the regulars.
Ah, but there's always hope that us ordinary folks can win a lottery jackpot and buy a place according to the Atlanta Journal newspaper:
The newspaper tweeted Wednesday that the $1 million winner, whose name is Willie Lynch, "can get 40 acres and a whole lotta mules."
http://www.myfoxatlanta.com/story/23769131/ajc-deletes-apologizes-tweet-lottery-winner
Well ordianary americans may be priced out the exceptional americans are buying hand over fist!
YA THIS WILL END WELL.
At least this time the FED will be out of pocket and Wall Street be forevered changed! They are assuring their destruction! Fool me once...shame on you....fool me twice and I get to destroy you!
The Bailed out TBTF have sold their under water RE Inventory to "Institutional Investors" who have been bailed out by the Fed Policy to inflate asset prices. Nicley done, Bankers Brokers Politicians get a five year rim job from the Fed, anybody have a problem with that?.... What? I thought, nobody noticed.
when owning a shelter has become the "American Dream," we really want to know whether obtaining food to sustain oneself will be the next major narrative.
So do you buy a house and lock in the low interest rates before prices escalate as fake money is used to purchase real assets?
Do you wait for the deflationary crash?
I'm looking to build Micro Houses, and undercut all those bastards.
I think the time will come when people need to sell land at any price just to survive a little longer, also wages will be at rock bottom and S/G up
And I will never take out a loan or homeowners insurance except liability.
When I see these stories/stats, I can't help but picture the Agenda 21 scenario of zero private housing.
Hmmm... it looks like I need to read that book eh?
"I come from Londontown, I'm just an ordinary guy. Fridays I go painting in the Louvre "
- Freddy Mercury, Queen.. Lazing on a Sunday aferternoon
Talked to a guy that manages an office of 20 Realtors - ezactly what he said - all cash hedgie buyers are driving market
All cash investor housing will be rolled-up by Correctional Corp of America as they decriminalize non-violent crimes like money-laundering by non-banks and trading natural products. Durable, hose-down surfaces will be the new trouble-free.
SO pretty much the only people buying houses, are people who are buying them to sell them to other people who want to buy them to sell them.
This housing market is clearly a house of cards.
They should begin dumping these homes before they take too much of a loss, its the only fucking sensible thing to do.
But w.e they could do w.e they want, its their monopoly dollars.
http://www.caltech.edu/content/what-causes-some-participate-bubble-markets
Don't be so gullible, McFly.
The banks wanted to push mortgages onto unqualified people.
This is proof you can't just go poof: now you're qualified.
http://www.businessinsider.com/new-mortgage-modification-program-cannot-...
In fact, all who SOLD the bubble are paying for holding these
mortgagors' feet to the fire.
Of course, squeezing what's left out of them,
that is, not even letting them default but rather
making them remain unqualified but with noses
to the grindstone indefinitely with minimal hope
of coming out better than defaulting
instead of letting them walk with non-recourse,
has a parallel with draining patients as they
get riskier, instead of washing over the treatment
of risk with single payer, or staying with
a very open ended structure but one
characterized with "risk equalization," thus
not letting risk drive eligibility which
defines privatizing the profits and socializing
the cost. And funneling subsidy into a risk
equalized system eliminates service classing
("tiering.")
The banks were supposed to accept the
risk they created too.
The rating agencies were not supposed to
make the mortgage securities look better
than they were, and junk tranches served
for shorting. If a mortgagor wants to
stay put and has defenses, that's one thing,
but otherwise the mortgagors become the
banks' field rakers, when they never should
have been there in the first place.
They often only put down 5%. None wanted to fail.
They should have, we all should have, I happen to think,
economics as safe amusement park.
So they should have non-recourse.
The way to know that's good for economies is by the
length of the line at the roller coaster vs. at
the bungee jump.
http://online.wsj.com/news/articles/SB123336541474235541
(was "article free pass" and apparently
has been open access since then)
NOW FOR THE REAL NITTY GRITTY.
http://pages.citebite.com/o2c0d2e1j0mlb
http://pages.citebite.com/d1i8e3n1t3rpv
Observe, thus:
The "Price Dispersion" Effect
(Jibberish For Selling Ladas
And BMW's One Year, And
Only BMW's The Next)
Combined With Case Shiller's
Method Of Indexing
http://www.youtube.com/watch?v=fmENKHmGUX4
(though at the rate we're going
that could be a big seller soon)
The Carriage Of Delinquent
Assets By The Public, Which
Is Essentially The Financing
Of Dead Weight So The
Buyers Of Those Investments
Can Keep On Keeping On
In The Manner Of John Corzine.
The Fact That Millions Of
Homeowners Never Left The
Position Of Being Underwater
And Literally Can't Afford To
Market Their Homes Lest
They Pay In Large Sums To
Their Mortgagees, Even Upon
Closing Of The Sales Of Their
Homes.
Even Where That Does Not
Appear Being The Case Owing
ToThe Case Shiller Index,
Nominally, It Would, I Believe
Be Far More The Case Were
More Thrift Withheld
Properties Marketed.
Keith Jurow Has Never Published
A Non-Fact Based Thing.
More Recently.
http://www.keithjurow.com/what-if-housing-bulls-are-dead-wrong/
http://www.doctorhousingbubble.com/secrets-of-housing-boom-fed-taper-fed...
This is getting Turkey'd.
http://henryckliu.com/page117.html
It's better getting Denmark'd.
http://pages.citebite.com/c2s2h2b1s4fbu
Trinidad'd.
http://instantoilspill.com/?url=http://duckduckgo.com/?q=Trinidad+sinking
Cyprus'd
http://www.zerohedge.com/news/2013-04-19/fed-governor-stein-warns-when-t...
Costa Rica'd Es Bueno.
http://en.wikipedia.org/wiki/Costa_rica
There was this:
http://online.wsj.com/news/articles/SB122265260912184329
(was "article free pass" and apparently
has been open access since then)
So I'd say the people who can't place their
homes on the market cause they're still
underwater are the real market cause were
the bubbles' original sellers allowed to
clear it the market would've recovered from
throwing up--probably by now. A Resolution
Trust type deal could have spaced it out.
The people priced out by the artificial
reflating of the bubble are the real market.
The original bubble sellers are the real market.
And when it's done some of the banks' dead weight
will be in the money supply, some will vanish,
never having been value supported by anything,
just as qualified demand.
Now, one can say, if the dollar's inflated,
won't that translate into real estate prices
at all?
And that's actually where I make a comparison
to health care.
Need and demand are not the same.
Should the dollar get inflated, that doesn't
mean people will have more of them.
It means stagflation and homelessness.
Most schools of policy have really neat
things etched above their entrance ways.
Yet, most of the kids walking through
them could phone it in better, from the
bathroom.
http://www.youtube.com/watch?v=mdsscxVgA4A