What about all the hedge funds that have bought 10's of thousands of houses? I heard not only are they raising the prices on the way up, but they aren't maintaining the houses and screwing up the rental markets.
We've been approached by a few with very low offers (via an agent). I've been tracking sales in the neighborhood and every month or so another 4-5 houses that were never on the market are sold. They are then rentals shortly thereafter. I've been pretty surprised at what things are still renting at, I thought it would plummet prices (and it still may) but they seem stable at about .6-.70 cents/sqft. It's not the Bay Area or even the nicest place in town but I find it peculiar that large investors would be interested enough to buy up 1% of the houses in an area every month or so, though the prices seem pretty good and that'd be a great rate of return.
[1] http://dealbook.nytimes.com/2013/06/03/behind-the-rise-in-ho...
All the talk of the Financial Sector, Credit Default Swaps insured by AIG London advised by Blackstone, and 30:1 leveraging of Mortgage Backed Securities deepening the crisis is met with yawns and allegations of being a socialist hippie who hates business.
Nope, it was the poor people who were too stupid and lazy to afford mortgages who were at fault. They were blamed for the 2008 crisis, and they'll be blamed for this bubble too. Oh, and the Communist Chinese too for good, Xenophobic measure.
I work with hedge funds that do this in CA, and neither of your points strike me as true.
I can't find the article I read a few months ago but it had similar anecdotes.
I'm completely OK with the US as a place where people from all over the world can reinvent themselves and tell a second chapter of their stories. That's what it's been for hundreds of years, and what made it great. Almost every one of us has at least once ancestor who came here to escape trouble in the old country. I'm not OK with it when it means that Americans are priced out of their own housing, especially now because these corrupt foreign officials aren't even coming here, but just buying real estate just in case things go bad in their home countries. Not only does it make housing unaffordable for us, but there's the moral hazard angle as well: by allowing nonresident foreigners to buy so much of our best real estate, with a great proportion of those being corrupt officials or people seeking resale to them, we're effectively subsidizing corruption in the rest of the world.
(Is it correct that every foreign investor buying real estate is a corrupt third-world ultra-HNWI? No, that's only about 1 in 4. The other 3 are speculators banking on the resale value to corrupt officials abroad.)
The question is: why are we allowing foreign speculators in our real estate market, prices where they are, in the first place? Once an average house costs more than 8 times the average income, you have to protect the homeland. Unless you've stopped caring about your own people.
I'm a foreign national, incidentally. I contribute to the high rent in NYC. I'd say tech money is ruining the city but the fellas down in FiDi got in ahead of us 30, 15 and 5 years ago.