The List, Cont.

T’is the Season

The so-called American Dream is up for grabs:

A bidding war broke out this winter at a new subdivision north of Houston. But the prize this time was the entire subdivision, not just a single suburban house, illustrating the rise of big investors as a potent new force in the U.S. housing market. D.R. Horton Inc. built 124 houses in Conroe, Texas, rented them out and then put the whole community, Amber Pines at Fosters Ridge, on the block. A Who’s Who of investors and home-rental firms flocked to the December sale. The winning $32 million bid came from an online property-investing platform, Fundrise LLC, which manages more than $1 billion on behalf of about 150,000 individuals. The country’s most prolific home builder booked roughly twice what it typically makes selling houses to the middle class—an encouraging debut in the business of selling entire neighborhoods to investors.

“We certainly wouldn’t expect every single-family community we sell to sell at a 50% gross margin,” the builder’s finance chief, Bill Wheat, said at a recent investor conference. From individuals with smartphones and a few thousand dollars to pensions and private-equity firms with billions, yield-chasing investors are snapping up single-family houses to rent out or flip. They are competing for houses with ordinary Americans, who are armed with the cheapest mortgage financing ever, and driving up home prices.

It’s not an exaggeration to say that the game is rigged against individuals.

“You now have permanent capital competing with a young couple trying to buy a house,” John Burns, whose real estate consulting firm estimates that in many of the nation’s top markets, approximately 20% of houses sold are bought by someone who never moves in, told the Journal.

Please don’t tell the Millenials to hold back on the avocado toast and Starbucks. This is another merde sandwich for their generation.


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4 Responses to The List, Cont.

  1. Ten Bears says:

    Avocados are the most water-hog fruit that can be bought, thirty-six gallons of water for just one avocado so yeah, wtf, we’re toast, so … enjoy that toast

    Liked by 1 person

    • Jimmy T says:

      Hey, it takes a gallon of water to grow one almond, but then water was once plentiful. Kinda get the idea that we’re heading, at least those who live on the Left Coast (thanks Lush Rimbaugh and congrats on being sober for nearly four months) and the proximal interior interior are going to experience desertification from Hell…

      Liked by 2 people

  2. Sirius Lunacy says:

    It is essentially a legal Ponzi scheme. The investors buy up houses to ‘flip’ them. Often selling them off to other investors who will flip them again. This creates an active market which drives up prices. The investors get extremely low interest rates and put very little of their own money in. So the young American couple wanting to buy their first home will find it costs much more than it should. Eventually there will be a ‘market correction’ and the prices will tumble. The investors, who have very little skin in the game, will just walk away. Leaving the banks with a bunch of overpriced houses to liquidate. The banks will then try to squeeze some of that money out of any real homeowners who were silly enough to sign up for an ARM loan and beg Congress to save them with taxpayer money and the homeowners will find themselves deeply underwater on their home loan.
    There were bills proposed after the last ‘market correction’ but, of course the GOP would have none of it.

    Liked by 1 person

  3. R White says:

    And some people wonder why the van life phenomenon has become a thing and not just a passing fad highlighted in a movie…


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