Mortgage crisis' is coming this winter: Bove http://finance.yahoo.com/news/mortgage-crisis-coming-winter-bove-153341109.html?l=1
http://ochousingnews.com/blog/must-sell-shadow-inventory-morphed-cant-sell-cloud-inventory-redux/ here is a real estate broker who says that the rise in housing prices is due to low inventory (manipulated by the banks) and that there is a large "cloud" inventory of underwater homeowners who will get kicked out of their homes as soon as the bank breaks even.
There "is" a large cloud inventory. But that is because the banks have turned the homes into bonds and are just stripping the yield off of them. Rents are going up everywhere and a well diversified housing portfolio beats the shit out of treasuries and even preferreds. And here is the kicker, if inflation kicks in, bonds get crushed, but these synthetic bonds they created will actually go up in value under large inflation increases. These banks and hedge funds found their new meal ticket after the MBS blowup.
isn't that just what banks do? if you're saying that the banks like the optionality of jacking up rents on the REO/loanonwer portfolio, I don't see that. The premise of the "cloud inventory" is that the banks are itching to get the underwater borrowers off the books as soon as breakeven happens (and likewise for the borrowers). the banks want to get out of the landlord business as soon as possible. that suggests the real estate market in most of the country (maybe not the hot markets on the coasts) will see sellers at the old highs for at least the next five-ten years, or until the millenials start buying houses in force.
No, the banks own the inventory and the hedge funds want it. The hedge funds are now "the" largest net buyer of real estate in the country. The banks already know "who" they are going to sell to and "they" are going to reap the "financing" benefits for the hedge funds. Think back to LTCM. LTCM needed credit and financing. Banks were tripping over each other to give it to them. In return, the hedge funds got favors from the banks, quid pro quo. The financial industry knows exactly what they are doing here. There are a lot of smart people who get paid very well to take large piles of assets and find ways to monetize them.
are you talking about Blackstone? It's not clear that the business of managing residential properties is a viable. it's not as attractive as managing big apartment buildings. hard to believe hedge funds want to get into that business.