Rental Backed Securities the next Housing Bubble (bond, brokers, credit)
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This source may not sound credible but after watching the video I thought it was actually a pretty good summary of what is going on right now. I totally concur with this assessment!
I thought it was actually a pretty good summary of what is going on right now.
I totally concur with this assessment!
And maybe it is. But I'll never know because I'm not opening a video.
This is a text based format. Video, images, etc often help but only are supplemental to that.
This means that it's your job (as the OP) to produce some pertinent TEXT to support your
recommendation and their assessment and conclusions; ideally with some quotes by identifiable sources.
Still waiting here for evidence of the LAST housing bubble. All I saw were markets reacting exactly as they should have to declines and then increases in mortgage interest rates. All the problems were created by crooked financiers deliberately making profits from poorly underwritten mortgage paper that they were selling into secondary markets.
Interesting...I just read up on this ..I knew that Blackstone has been buying homes in bulk for a while.
Apparently the point of the bonds is so that they can buy up more homes cheap...but im wondering how they will do this if inventory is low and a lot of foreclosures have already been sold to them or other investors.
I could see this blowing up again. I imagine it would be difficult to manage so many thousands of rentals properly.
The other thing that sucks is that these big companies have screwed things up for mom and pop individuals to buy rental incomes, and of course for families to buy their own home.
The bulk buying is a very small % of the total market - something less than a million homes total across all of the big private equity firms. They're also focusing primarily on low end homes under $200K - usually well under. I've looked in my county records to see how many were picked up by the top 4 and it was less than 300 total, which is equivalent to about 3 days worth of for sale inventory, so a drop in the bucket. Other areas it's a lot higher, maybe 35% of total sales but over a very short period of time.
The big thing people seem to be missing is that these homes are largely occupied. They do not represent excess housing capacity like we had back in 2007. The people living in them can for the most part afford the payments since they're market rate rentals.
Put this in the context of the last bubble where 10's of millions of mortgages on homes priced at all levels went into default. This doesn't have the same scope. Even if in some odd turn of events every single renter was kicked out and the houses all put on the market at once, it would be equal to about 2.5 months of existing home inventory - this following 5 years of record low home building. Not enough to cause a protracted downturn in all but the most heavily investor saturated markets with little organic demand.
Quote:
Originally Posted by fairlaker
Still waiting here for evidence of the LAST housing bubble. All I saw were markets reacting exactly as they should have to declines and then increases in mortgage interest rates. All the problems were created by crooked financiers deliberately making profits from poorly underwritten mortgage paper that they were selling into secondary markets.
That's not what happened. Interest rates weren't the reason for the price changes once the bubble got underway. Prices went up as interest rates rose, then prices fell as interest rates fell.
That's not what happened. Interest rates weren't the reason for the price changes once the bubble got underway. Prices went up as interest rates rose, then prices fell as interest rates fell.
Sheesh! Prices rose as mortgage rates fell by 335 basis points in three years. If a wave of sales and refi's had not ensued, a Congressional investigation would have been called for. Interest rates rose again between mid-2004 and mid-2006. The housing market responded appropriately, peaking in the Spring of 2006. Sadly, the horses were already out of the barn on the credit crisis. By the summer of 2007, it was all out in the open as major banks began taking tens and then hundreds of billions in mark to market losses. Everyone knows what happend after that. There was no bubble. The crash resulted from bad paper deliberately written by unscrupulous brokers and sold by private-label securitizers into secondary markets to fail. The collapse was manufactured by the simple greed of cowboy capitalists on Wall Street aided and abetted by crooked appraisers, ovewhelmed bond raters, and a bunch of rah-rah laissez-faire free market regulators who did nothing at all about any of it.
Arent commercial mortgage backed securities basically rental backed securities? The money used to pay those commercial mortgages comes from rents already dont they?
This source may not sound credible but after watching the video I thought it was actually a pretty good summary of what is going on right now. I totally concur with this assessment!
Which is what, exactly?
Quote:
Originally Posted by fairlaker
Still waiting here for evidence of the LAST housing bubble.
Well, we all know you're not exactly up on Economics.
Quote:
Originally Posted by fairlaker
Sheesh! Prices rose as mortgage rates fell by 335 basis points in three years.
Uh, yeah, no kidding.....that's what happens when you have Interest Inflation. You have Interest Inflation when there is interference in the Markets from a government that artificially suppresses interest rates; that artificially floods the Market with excess cash or credit via government polices; that artificially floods the Market with excess cash or credit by subsidizing or backing loans; and by policies that artificially expand qualifications to obtain mortgages.
You see the same thing.....Interest Inflation.....with tuition and student loans: artificially suppressed interest rates; government policies that flood the Market with excess cash/credit; government policies that artificially expand qualifications to enter/attend university; and excess cash/credit via government-backed loans....all of which combine to force the cost of tuition to rise.
Quote:
Originally Posted by NJ Brazen_3133
Arent commercial mortgage backed securities basically rental backed securities? The money used to pay those commercial mortgages comes from rents already dont they?
I don't know. I don't have time to watch useless videos posted by people who lack the courtesy to summarize the points in the video.
I'm wondering if maybe it isn't corporate residential rentals.
Where I am, we have two corporations that are buying up property at furious rates over the last 10-12 years or so and expanding the rentals. I'm talking about corporations that purchase existing rental units, demolish them, then build new rental units.
What I'm seeing is that within maybe 10-20 years, the bulk -- better than 75% --- of the residential rental properties will be owned by companies instead of private landlords (which doesn't really sit too well with me).
Bubbling....
A lot of people are getting alarmed over this, yet REITS and commercial landlords have been doing this for quite a while. The only difference is that this time most of the property is single family attached and detached homes. That is a new business model, and no one knows how it will perform. This has always been dominated by mom and pop landlords. I wouldn't be worried about the selling of paper, but rather how these companies are going to be able to manage these properties. It is going to take good management on the ground, and I wish them all the luck in the world.
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