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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Can home values increase if interest rates are rising? What has happened historically?
Why would “home values” increase? Houses depreciate, ALWAYS.
….and Burdbrain blathers on….ALWAYS!
And remember,
housing is an ongoing loss as a result of depreciation.
see….always….blathering birdbrain.
“San Diego Housing Prices Down 11% YoY, Inventory Up A Whopping 50%”
http://www.movoto.com/statistics/ca/san-diego.htm
Get what you can get for your house today because it’s going to be much less tomorrow for decades to come
“Can home values increase if interest rates are rising?”
Yes. The magic ingredient is inflation, which can drive up home prices due to an increase in real asset demand as an inflation hedge and also drive up long-term interest rates due to bond traders pricing in an inflation risk premium.
Example: U.S. markets from 1975-1980.
Opposite situation: Japanese asset markets from 1990-2010.
P.S. “Other things equal” (i.e. sans a large increase in inflation expectations), higher interest rates lead to lower housing demand…
But there is no “inflation”.
The deflationary spiral rages on.
HA doesn’t get out much…..you’ll have to forgive him for his comments.
Jinglemail doesn’t have integrity. You’ll have to beware of his comments.
I forgive you.
“With 25 MILLION excess empty houses, 4.4 million of which are in California, how deep will the collapse be?
California is the epicenter of the decline. Remember… Even if the houses are occupied, houses depreciate rapidly.
I spread the Case Shiller 20 index from 1987-2013. It is interesting to note that housing prices rose in 20 of the 27 years or 74% of the time. (The drops occurred ‘91, ‘93 and ‘07-’11).
I then added the FMac interest rate history along side. There were 10 years when interest rates rose. Surprisingly, housing prices went up in all 10 years. (’87, ‘88, ‘94, ‘96, ‘99, ‘00, and of course the now infamous run of 2003 - 2006).
I find this to be curious, given the statements by some HBB posters that rising interest rates will drive home prices lower. That is not the historical case over the last few decades.
This is a more accurate look at where housing prices always where, where they went, and where they’re going now.
http://img802.imageshack.us/img802/7812/caseshiller.jpg
“I spread the Case Shiller 20 index from 1987-2013. It is interesting to note that housing prices rose in 20 of the 27 years or 74% of the time.”
Any general conclusion you might have intended to be drawn from this information is severely undercut by the backdrop of steadily declining interest rates that played out over the two decades from 1982 through 2013 or so. The key questions going forward are:
1) not of whether interest rates will rise from their current levels, but how quickly they will increase;
2) what will happen to U.S. housing prices without the artificial prop of Fed-engineered rock-bottom mortgage rates.
Yes, good point Whac. There is a lot of merit in your observation.
However, I do think the supply and demand curve plays an important part. There is no oversupply in my market (Sacramento foothills) and that is what really drives demand/prices. New homes have to be built and they will cost more than existing inventory.
“However, I do think the supply and demand curve plays an important part.”
Agreed.
I assume you realize the demand curve steadily shifts to the right as interest rates drop, with the opposite movement as they rise?
And that when prices are artificially driven above their long-term sustainable levels, the supply curve shifts to the right as home builders act to exploit the short-term profit potential?
And that a shift to the right in the supply curve coupled with a shift to the left in the demand curve implies lower equilibrium prices?
Glad to know we are on the same page.
“I assume you realize the demand curve steadily shifts to the right as interest rates drop, with the opposite movement as they rise?”
But is this true if it is coupled with home prices falling?
I would submit that it is not.
If home prices are falling, regardless of where interest rates are, a person actually with the discipline to save their money to build up a reasonable down payment would NOT jump into the market until a bottom in prices had firmly been established…even if they have enough income to afford the mortgage.
Market psychology gets in the way of your postulation about demand curves.
“If home prices are falling, regardless of where interest rates are, a person actually with the discipline to save their money to build up a reasonable down payment would NOT jump into the market until a bottom in prices had firmly been established…even if they have enough income to afford the mortgage.”
My example had to do with the effect of falling interest rates in isolation. As your example highlights, other factors, such as undeniable evidence that housing prices are falling, could result in a drop in demand that swamps out the effect of low or falling interest rates.
Japan from 1990-2010 is a good example: Rates remained low throughout the period, even as home prices steadily deflated.
And undeniable evidence that housing prices are rising can result in an increase in demand that swamps out the effect of low but rising interest rates.
Price direction does cut both ways.
Because housing is such a big purchase that people have made and lost money on (in big ways in both directions), you can’t just look at the interest rate picture in isolation.
Market psychology is a big part of housing markets.
This is Shiller’s “animal spirits” that he refers to frequently (and even wrote a book about…which I have not read).
Inflating prices to unaffordable levels results in less demand you knot-head.
“And undeniable evidence that housing prices are rising can result in an increase in demand that swamps out the effect of low but rising interest rates.”
That happened for a while in the pre-2008 episode, until prices got bid up so far out of reach that nobody could push them any higher.
At some point, budget constraints kill the slice of demand that depends on ever-rising prices.
Sounds like you are worried. You should be.
“There were 10 years when interest rates rose. Surprisingly, housing prices went up in all 10 years.”
Did you ever hear of lagged effects?
2006 is one example, and 2013 is quite likely to turn out to be another. You said housing prices kept going up with interest rates in 2006. But what happened to prices in the 2007-08 period?
“There were 10 years when interest rates rose. Surprisingly, housing prices went up in all 10 years.”
Higher rates means lower risk to the lender, and add government principal guarantees, and the flakes are handed the keys. Used car buyers frequently sign on the line despite 20% plus interest rates.
Market psychology matters. Not everyone buys their home by maxing out their DTI ratio.
No. Price matters.
And resale prices are 250% above long term trend.
One factor in Japan, which is not a problem in the U.S.:
Based on the Health and Welfare ministry estimation released in January 2012, Japan’s population of 126,000,000 will keep declining by about one million people every year in the coming decades, which will leave Japan with a population of 87 million in 2060. By that time, more than 40% of the population is expected to be over the age of 65.
That will put a real crimp on housing demand!
Well think it about this way;
The US currently has 25 MILLION excess empty houses, 80 million boomers with one foot in the grave and the other on a banana peel will leave another 35 MILLION excess empty houses resulting a 60 MILLION unit supply.
I’d like to know where this excess inventory is because it sure as hell isn’t in any desirable area close to me.
Why change up usernames?
I’d like to know where this inventory is too.
HA, please let us all know where this excess inventory is. I’m thinking most of it is shadow inventory and cities like Detroit where nobody wants to live. People want to live in desirable areas; inventory is very low in these type of areas no matter what part of the country you are in.
The boomer effect won’t happen for a while.
What matters about the boomers is when there were more boomers born than the replacements in the modern era. We have had about 4 million live births in the US pretty consistently since 1989 (people who are turning 25 today).
The first time during the baby boom generation that there were more than 4 million born in a single year was 1954. These folks today would therefore just be turning 60.
If you turn 60, your life expectancy is about another 20 years.
The prognostications of boomers with “one foot in the grave” is pretty early.
Even with the low RATE of population growth in the US, there was an estimated 3.95MM live births in the US in 2012 (report dated September 2013, I don’t think there is a measure yet for 2013).
The “boomer effect” is already happening.
HA, you need to study demographics. Once again your head is in the sand with your derriere in the sky.
There are 80 million millennials coming in right behind the boomers. In fact, because of longer life spans with longer working careers and a more even stratification in the population, there will be a higher worker/retiree ratio in 2050 than there is today.
Put your “boomer bust” scenario right beside your “25 million excess houses” fantasy.
Wrong again.
The 25 year boomer demographic cohort dwarfs any other subsequent 25 year cohort.
Worse yet for you and your depreciating houses, the 25 MILLION excess empty housing is reality and it’s growing by the day as boomers expire.
Ahem…
Note that this article doesn’t get at the other looming demographic issue facing the U.S. housing market, which is the morphing of the Baby Boom generation from families with kids at home to empty-nest retirees coupled with the dearth of household formation among student loan debt-strapped, unemployed twenty-somethings. Hopefully the all-cash investor brigade will keep propping up U.S. housing demand, as end-user demand is toast.
US population growing at slowest rate since 1930s, census data shows
• Population grew at rate of 0.7% in 2013 to 317m people
• North Dakota fastest-growing state after recent oil boom
Tom McCarthy in New York
theguardian.com, Tuesday 31 December 2013 13.02 EST
The census bureau estimates that there is one birth on average in the United States every eight seconds. Photograph: Brennan Linsley/AP
US population growth has slowed to levels not seen since the Great Depression, according to data released this week by the US census bureau.
The US population was expected to grow just 0.7% in 2013, to arrive at 317,297,938 people on New Year’s Day 2014. That rate was down from 0.73% in 2010-2011 and much lower than the 1.2% growth rate of the 1990s, a decade of economic expansion.
The United States has not seen such slow growth since the Depression era of 1933-1937, according to William Frey, a demographics expert and senior fellow at the Brookings Institution.
“Up until 2008, really we didn’t see those growth rates change much,” Frey said. “This sharp bump that we’ve seen in the last few years does suggest that the economy has a lot to do with it.”
But average annual growth, Frey said, is a “fairly crude measure” that can miss the underlying influence of immigration laws and changing cultural and social mores.
“In the Great Depression era, migration laws were stricter in the late teens and early to mid-20s,” he said. “You had lower fertility rates as well, with the very dire circumstances” of many families.
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Historically, speculating liars have been crushed when their chickens came home to roost. Leverage is a bitch working against you. Bruddha, can you spare a dime?
Does turnover at the top of the Fed typically precipitate a financial crash?
My suggestion is, what will happen with prices in your area this year?
It’s always the core question and leads to many fun answers from lying shill scumbags.
You gotta laugh at the known liars/hiders. Years after The HBB was established as the leader of housing data and truth, they continue their attempt at hitting the blog reset button and redirecting from truth to lie.
Given the fact that Asian and the U.S. markets are decoupled, is it safe to ignore looming economic worries over the China economy?
The MSM has yet to run out of hand-wringers to quote!
China is No. 1 risk for world economy: Soros
January 3, 2014, 10:47 AM
Don’t worry too much about the U.S. or Europe, says George Soros.
The major uncertainty facing the world today is China, writes the billionaire investor in a column for the Project Syndicate website. He says: “There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.”
The People’s Bank of China moved to rein in debt in 2012, but then the world’s No. 2 economy experienced “real distress,” Soros writes. So China’s Communist Party reasserted its supremacy, ordering steelmakers to restart their furnaces and bankers to ease credit.
China’s economy turned around, and party leaders also announced major reforms in November. “These developments are largely responsible for the recent improvement in the global outlook,” Soros says.
What happens next? The 83-year-old Hungarian-American sees two possibilities:
Beyond China, Soros argues that a lack of proper global governance is the “other great unresolved problem.” That could continue indefinitely, while the Chinese conundrum will come to a head in the next few years, he says.
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Whac says: “Given the fact that Asian and the U.S. markets are decoupled….”
I suggest this is not a fact, just a theory. Do you think they are decoupled? I think the U.S. market is insulated to some degree, but an upset in China will have an effect in the U.S.
I was joking, dude. I’ll try to remember to include sarcasm tags next time around.
For the record, I’ve always maintained that decoupling was a dumb idea, and the Goldman Sachs economist who dreamed it up was full of it.
Is there some chance the Fed could unwind its period of extraordinary intervention faster than anticipated?
If so, why?
Jan. 3, 2014, 11:46 a.m. EST
Philly Fed’s Plosser warns of rapid rate rise
By Steve Goldstein
WASHINGTON (MarketWatch) — Philadelphia Fed President Charles Plosser warned Friday that the central bank may have to be “aggressive” in lifting interest rates and may have to chase market rates higher, if banks were to quickly release reserves. He also suggested the expectations of his colleagues by the end of 2016 that calls for Fed funds rates to be below 2% even when the job market is back to normal may be too low. Plosser also said the central bank could face political pressure not to lift rates. “Technically we can certainly do that, but it will be a question of will,” he said. He also said the Fed is monitoring asset prices and leverage to avoid “frothiness” in markets. Plosser is known for his hawkish views and becomes a voting Federal Open Market Committee member this year. The Fed last month started tapering their bond-purchase program, reducing monthly purchases to $75 billion.
Question:
My wife’s company gives out their bonuses early in each new year. So, if you so choose, this affords one the ability to substantially front-load 401k contributions (ie. you can put a portion of the bonus into the 401k).
Last year, we decided not to do this, and instead contributed our 401k money over time from the normal paychecks.
This year, I’m thinking about simply biting the bullet and making the contributions now.
Any opinions out there? I know the standard view of dollar cost averaging would argue for putting the $ in over time, but dollar cost averaging last year cost me in a big way…since I’m expecting to go to cash (or the closest I can to cash as possible) later in the year, I’m really just thinking about being able to pick up a few % in equity markets in the first part of the year, rather than get 0% if I contribute after I have gone to cash.
I know this could be considered nickels in front of a steamroller, but I’ve got another 20 years ahead of my wife and I before we pull anything out, so we can ride through some ups/downs.
Any (constructive) thoughts?
Is this case one or the other? (Lump sum contribution now vs. every paycheck) or would you continue to contribute throughout the year. Also is there a company match?
There is a company match, up to 50% of the individual max (so if we put in $17.5k, the company will match with $8.75k).
It’s not either/or, but the bonus is more than sufficient to put in all of our $17.5k (if we want), and get the full company match. We then wouldn’t contribute anything further for the rest of 2014.
We can put in as little, or as much of the bonus as we want…last year, it was 0%, and we still maxxed out well before year end from paycheck contributions.
This is purely a market timing decision…which I recognize is risky at this stage of the market…
Personally I think LSI is too volitile at this time for reasons that have been outlined throughout this blog many times. If anything, I would split the difference 50-50. Half up front and DCA through the rest of the year to mitigate some risks.
I think that’s what I might do…although it is tempting to just get it out of the way. We are putting in as Roth 401k, so it’s after-tax $ that’s going it…it hurts quite a bit more on a monthly basis than if it were pre-tax, so there is a big temptation to rip off the band-aid.
Couple of comments:
1) Why Roth IRA. Get the deduction now. I am betting you will have opportunities to convert from Regular IRA to Roth IRA when you have a period of low income (which does not seem to be now for you.)
2) Why go to 100% cash. Stay diversified. If you must go to cash, go 50% cash and stay in a dividend mutual fund like VDIGX or a REIT fund with dividends like CLNY.
3) Buy individual stocks with long term growth potential.
4) Liquidate depreciating assets (housing) NOW.
Why Roth? Because the government lets me. While I don’t have much concern that the government will take away Roth benefits once the money is in a Roth account, it is possible that contributions are restricted going INTO Roth accounts in the future based on income and/or the amount of assets already in Roth accounts.
OK, a topic for serious discussion:
There have been numerous attempts to compare what has been happening with this credit cycle to other periods in history (in either the US or other countries).
The two most prominent theories seem to be:
1. There will be weak inflation, until it’s not longer weak and goes much higher and the Fed won’t be able to stem the tide very well due to the extraordinary efforts that it has made to create money since the crash; or
2. We will similar to Japan, with an extended period of low interest rates and flattish/declining consumer and real estate prices and a stagnant stock market.
I’m sure there are other theories as to what happens next, but these seem to be the most prevalent.
So, my question for discussion is this:
What one piece of data would you look for (and when) that would make any of you conclude that one scenario is more likely and the other less likely?
For me, it will be an eye specifically on wages once we reach “full employment” (5-5.5% unemployment).
If we reach full employment and there is not wage growth (in excess of other price inflation in the economy) that follows, then I think we can conclude that a combination of globalization and technology will keep typical workers in a “semi-permanently” screwed status for a LONG time, and thus we will likely have low rates for a long time like in Japan.
However, if following reaching “full employment”, there is the start of wage growth in excess of other price inflation in the economy, that could very well be the catalyst that drives inflation and interest rates higher, making scenario #1 more likely to play out.
We will similar to Japan, with an extended period of low interest rates and flattish/declining consumer and real estate prices and a stagnant stock market.’
The FED fears deflation like japan so therefore embraces inflation with its very low interest rates and buying treasuries, mortgages etc.
Anyway I think wages will stay low and the stock market and RE market will continue to rise with a result of Stagflation for most Americans.
However, if following reaching “full employment”, there is the start of wage growth in excess of other price inflation in the economy, that could very well be the catalyst that drives inflation and interest rates higher, making scenario #1 more likely to play out.”
no Unions no wage growth companies will just rely on over working the most productive workers, outsourcing and cutting corners.
“RE market will continue to rise with a result of Stagflation for most Americans.”
You do realize that housing demand is at 1997 levels don’t you? You understand why?
Did you think about these things before you posted?
“What one piece of data would you look for (and when) that would make any of you conclude that one scenario is more likely and the other less likely?”
Our problem is that the velocity of money has slowed to a crawl. The fed prints up a fresh batch and buys treasuries, which the government fritters away, but it quickly ends up in investment/savings accounts rather than circulating though the economy. The economic stall warning horn has been sounding for years now. Corruption.
1) Wage inflation is the result of price inflation. No one employer will voluntarily pay more wages…..the workers demand raises because prices are rising demand it.
2) Everyone thinks Japan’s economy is stagnate because of monetary policy. I submit their economy is stagnate because they have a “closed society” with no immigration. Thus their population will shrink from 125 million to 60 million in the next 50 years (of which 40% will be over 65 years old). That headwind will keep their economy shrinking.
3) The U.S. has great demand for immigration and has a sensible immigration policy in place. Population growth is lower than historical standards, but still positive.
1.You’ve got it upside down. Wages are the genesis of inflation, ALWAYS.
2. US population growth is the lowest in national history
3. Immigration is flat to negative.
Weekend. How much Will ‘re taxes go up next year
Here’s to hoping your nephew doesn’t get angry with you in 2014 and feed you to a pack of starving dogs.
Stripped naked, thrown into a cage and torn apart by 120 starving dogs: How Kim Jong Un had ’scum’ uncle executed
By Richard Shears
PUBLISHED: 04:20 EST, 3 January 2014 | UPDATED: 19:38 EST, 3 January 2014
North Korean leader Kim Jong-Un executed his uncle by having him stripped naked and eaten alive by starving dogs while he watched, a report claimed yesterday.
Jang Song-Thaek was said to have been thrown into a cage with his five closest aides, after which 120 hounds which had been starved for three days were released, eating the men until there was nothing left.
The horrifying details emerged in a report in Singapore’s Straits Times newspaper, which said the gruesome act was known as ‘quan jue’, or ‘execution by dogs’.
In previous executions, political prisoners were killed by firing squads with machine guns, although one aide was tied to a post and a mortar round was fired at him.
The report said the ‘quan jue’ lasted an hour, and Kim was said to have watched the stomach-churning ‘show’ along with 300 senior officials.
Analysts said the tyrant had probably invited the officials to the death ceremony as a warning that they should not step out of line and remain faithful not only to him but also to the Stalinist regime.
Kim had described his 67-year-old uncle – who was married to his father’s sister – as a traitor, a womaniser and a ‘despicable human scum – worse than a dog’.
It was previously thought he had been executed by firing squad.
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Jang’s execution bodes ill for China
The purge of North Korea’s second in command sent shock waves around the world. One writer looks at the impact on bilateral ties while the other details how the noose had tightened on Jang Song Thaek.
Published on Dec 24, 2013
North Korean leader Kim Jong Un (left) with Jang Song Thaek, who was the vice-chairman of the National Defence Commission, at a cemetery for Korean War veterans in Pyongyang in July. — PHOTO: ASSOCIATED PRESS
By Ching Cheong, Senior Writer
THE execution of Jang Song Thaek, the No. 2 man in North Korea, took Beijing by surprise and will adversely affect bilateral relations.
Beijing’s displeasure is expressed through the publication of a detailed account of Jang’s brutal execution in Wen Wei Po, its official mouthpiece, in Hong Kong, on Dec 12.
According to the report, unlike previous executions of political prisoners which were carried out by firing squads with machine guns, Jang was stripped naked and thrown into a cage, along with his five closest aides. Then 120 hounds, starved for three days, were allowed to prey on them until they were completely eaten up. This is called “quan jue”, or execution by dogs.
The report said the entire process lasted for an hour, with Mr Kim Jong Un, the supreme leader in North Korea, supervising it along with 300 senior officials.
The horrifying report vividly depicted the brutality of the young North Korean leader. The fact that it appeared in a Beijing- controlled newspaper showed that China no longer cares about its relations with the Kim regime.
Two days later, the Global Times, associated with the People’s Daily, a Chinese Communist Party organ, followed up with a sternly worded editorial saying that the abrupt political change epitomised the backwardness of the North Korean political system. It warned the Chinese government not to coddle North Korea any longer, saying that the majority of Chinese were extremely disgusted with the Kim regime.
The incendiary story, plus the stern editorial, provided a measure of the extent of Beijing’s loathing, which is quite understandable.
In purging a top official known for his close ties with Beijing in such a brutal manner, Pyongyang did not hide its antagonism towards China.
The official litany of Jang’s treason implicated China three times. Jang was accused of underselling coal and other natural resources for which China was virtually the sole customer. He was also charged with “selling off the land of Rason economic and trade zone to a foreign country for a period of five decades under the pretext of paying debts”. Finally, he was accused of selling precious metals, thus disrupting the country’s financial stability. In fact, China purchased some of North Korea’s gold reserves several months ago.
He was also accused of aiding Chinese businessmen in securing low prices for North Korean goods and commodities.
The purge of Jang reflected the longstanding suspicion and apprehension of the North Korean regime towards China, which dates back to the time of Kim Il Sung, North Korea’s founder.
Although China fought the Korean War to preserve the Kim regime, he was less than grateful. Once the war was over, Kim started purging the Yan-an faction within his party. This faction received its training in Yan-an, the capital of the Chinese Communist Party in the 1940s.
Stanford University research fellow David Straub recalled that when he accompanied former United States assistant secretary of state James Kelly to North Korea in 2002, the North’s then Vice-Foreign Minister Kang Sok Ju made comments that minimised Chinese assistance during the Korean War.
When the son, Kim Jong Il, took over the helm, he did not hide the fact that his nuclear weapons could be used against China.
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Kim Jong Un executed uncle by feeding him to pack of starving dogs
News BBC
Published on Jan 3, 2014
Forget the hangman’s noose, the firing squad or lethal injection: North Korean leader Kim Jong Un executed his uncle and a handful of the man’s aides by feeding them to a horde of 120 starving dogs, according to a shocking (but unconfirmed) account.
…
Wow…where’s the youtube link?
Young Chubby Cheeks Kim seems a bit over the top, no? Feeding your uncle to the dogs cannot generate good karma — no way, no how.
Used to be North Koreans eating dogs; now it’s the other way ’round.
Don’t fight the Fed!
Last updated: January 3, 2014 10:22 pm
Pimco’s Bill Gross suffers tough 2013
By Robin Wigglesworth and Stephen Foley
Bill Gross, co-chief investment officer of Pacific Investment Management Co. (PIMCO), speaks during an alumni event hosted by UCLA Anderson School of Management in Beverly Hills, California, U.S., on Thursday, Nov. 17, 2011.
The flagship bond fund run by Pimco’s Bill Gross last year suffered its worst annual performance in almost two decades, while equity funds focusing on smaller companies were buoyed by signs of a western economic recovery.
The $244bn Pimco Total Return Fund – until recently the biggest mutual fund in the world – lost 1.9 per cent in 2013, its worst fall since the bond market rout of 1994, after Mr Gross was wrongfooted by the US Federal Reserve’s decision to scale back monetary stimulus.
The mounting economic recovery in the US, which sparked the Fed move, and a return to stability in the eurozone have revived the animal spirits of many investors, who are now betting on a strengthening recovery in 2014.
As a result, big mutual funds that invest in equities – and particularly those of small companies with deep roots in the real economy – were last year lifted by a roaring stock market rally across most of the developed world. The S&P 500 gained 30 per cent in 2013, and the MSCI World index is close to its all-time high despite a tougher outlook for emerging markets.
The best performing fund with more than $10bn of assets last year was T Rowe Price’s New Horizons, according to data provider Morningstar, which benefited from investing in small, rapidly growing companies and handing a big allocation to technology groups like Twitter.
“Equities have done better than bonds, US equities have done better than foreign equities, and small-cap US equities have done best of all, especially those that are posting the fastest growth,” said Dan Culloton, fund analyst at Morningstar in Chicago.
Mr Gross correctly predicted that the US central bank would delay tapering its emergency asset-buying programme in September, prompting the money manager to tweet: “Not braggin’ but what did we tell you.” Yet the Fed still followed through in December, capping a miserable year for most bond fund managers.
“Our performance periodically, and sometimes for frustrating long stretches, stuffs our noses or aches our heads, and makes us wonder why we hadn’t been more careful about washing our hands during flu season,” Mr Gross wrote in a report in December.
His fund suffered record redemptions with $41.1bn pulled out in 2013, according to Morningstar. Clients took out $4.2bn in December alone.
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I posted this once before but don’t think anyone noticed -
Blackstone Establishes Buy-To-Rent Lending Platform
http://finance.yahoo.com/news/blackstone-establishes-single-family-buy-151100594.html
This is an interesting development - a possible second exit strategy for Blackstone (lending “investors” money to buy Blackstone’s overvalued houses), and also a new way for the public/dumb money to get into housing very late in the game.
Buy-to-let mortgages for mom-and-pop investors have long been a contributing factor to the UK housing bubble, but does anyone remember them from Bubble 1.0 in the US? If this is in fact their first Stateside appearance, could this be a “new” alternative to the crazy teaser rate ARMs that have yet to emerge in Bubble 2.0? Thoughts?
‘Jas Khaira of Blackstone Tactical Opportunities said, “We see a great opportunity to fund small-and -medium-sized investors in the single-family space to help them expand their portfolios…”
John Beacham, President of B2R Finance, said, “We saw a gap in the market where there was a lack of lending products for smaller investors looking to finance their single-family home portfolio. Few financing sources currently exist for this very significant pool of investors and B2R solves that problem.” ‘
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