Housing Bubble 2.0

Posted March 31, 2013

Are you interested in the single family home market?

If so, you might want to watch this interesting February 7, 2013 CNBC “Closing Bell” video in which David Stockman and CNBC’s Diana Olick(1) discuss the factors they say are driving a new bubble in single family home demand and creating a new home pricing bubble.

They also discuss the factors that might cause that bubble to, in Stockman’s words, “splat” and deflate at some point in the near future (1 to 2 years).

Other Resources:
(1) See, “Housing Market Already Shows Signs of a New Bubble” By Diana Olick - CNBC Realty Check - Tuesday February 5, 2013, at:

(2) If the implications of an institutional home buying bubble interest you, you might also want to look at an article that was published on Posterous on September 4, 2012 titled, “The Institutional Home Buying Bubble” at: http://billsplace.posthaven.com/the-institutional-home-buying-bubble

The Looming Rentcropper Society

In addition to the problems mentioned in Institutional Home Buying Bubble (see post below) there are few other reasonable concerns about the programs that facilitate such institutional bulk purchases.

In addition to the operational difficulties, the operational overhead, and the lack of ‘scalability’ in the bulk ownership and the property management of single family homes – which are presumably geographically disbursed - some commenters have mentioned a few other un-intended negative consequences which might flow from federal government sponsored, and large bank sponsored, programs for the bulk sale of Real Estate Owned (REO) and foreclosed single family properties.  To read about some of the other (somewhat predictable) unintended negative consequences of the bulk sales of single family homes to institutional owners read the articles named and hyperlinked below.

Resources:
Our Coming Rentcropper Society By Yves Smith posted on NakedCapitalism 8/21/2012, at: http://www.nakedcapitalism.com/2012/08/our-coming-rentcropper-society.html#Td4eh6HzCh0JProP.99

Our Coming Rentcropper Society: Private Equity Firms Buying-up Blocks of Foreclosures Nationwide By HiPointDem posted on DemocraticUnderground 8/24/2012, at: http://www.democraticunderground.com/10021191182

Foreclosure Bulk Sales Program Allows Banks and Hedgefunds to Buy Low After Selling High By David Dayen posted on FDL March 21, 2012, at: http://news.firedoglake.com/2012/03/21/foreclosure-bulk-sales-program-allows-banks-and-hedge-funds-to-buy-low-after-selling-high/

FHA Moving Forward with Bulk REO Sales By Greg Fielding from 8/27/2012 post on Bay Area Real Estate Trends, at: http://bayarearealestatetrends.com/2012/08/27/fhfa-moving-forward-with-bulk-reo-sales/