We just came out of the mother of all Real Estate cycles that devastated banks, lenders, investors, insurance companies, buyers, borrowers and sellers leaving the Real Estate wounded and dead all across the United States and even overseas too
PREY TELL?
The third leg of the stool of the United States which is Real Estate and all its related and relevant industries were knocked around and then down and stayed down for years. Brutal this Real Estate cycle was because it was manipulated by opportunists that saw and seized on a weaknesses in the systems that specifically guard against this type of failure. Government wasn't governing
HOW CONVENIENT
Remember, when the crash that caused the 1929 depression to take place and run a ten year course, it was because there were no regulations or need for them prior but instead were created afterwards to prevent this from ever happening again..Those systems were relaxed, retired and were not updated. Well they are now once again. Locking the barn after the cows escaped?
WHY ARE THE INTEREST RATES SO LOW FOR SO LONG?
Now that some of the Real Estate dust is settling, what we call "normalcy" is trying to take its place and make its way back in the Real Estate transacting world once a gain. Helping this along are way below historic interest rates that are holding longer than they should...This should tell us something...but what?
SHADOW INVENTORY IS STILL IN THE SHADOWS
Right now, there are millions of people still underwater with their mortgages and delinquent with payments still unresolved for one reason or another. Furthermore, it has been revealed that millions of homes are owned REO by banks, lending institution's that have yet to hit the market
RELEASE OF PRODUCT NEEDS QUICK ABSORPTION
Remember that banks and all the rest are not holding companies and never were but they are now. What will happen when all this inventory is released? When will it be released and why isn't being released are all good questions. The interests rates being held low set the stage for quick absorption when they are released is making sense to me
REMEMBER ALL THOSE INVESTORS WHO BOUGHT AND HELD?
Also consider this too. All those cash rich investors who bought up distressed properties over the last 3-5 years knew it was prudent to do so and either flip for a quick 30-? per cent return or hold for long term big $$$ flip which is usually 3-5 years. Their thinking was and is sound too
EVERYONE CASHING IN FOR TOP DOLLAR AT THE SAME TIME?
While they were/are sitting on their investments, renting out property gives them cash flow and returns on their investment until they pull the trigger to release and sell. If they all sell at the same time, what affect will it have on this market that is trying to stand and steady itself
SUMMARY
For clarity: Banks release their REO's, investors cash in their short and long term holds and the market now becomes flooded with high end (expensive) product that will affect the ready, willing able dynamics of a free and self-correcting market.
CAUGHT SHORT AGAIN?
Could this leave some sellers caught short and have their equity go up in smoke? Will recent buyers who paid market or more be caught SHORT again? Will this lower the pricing once again to within reach of first time buyers and people who are income challenged?
I don't believe we have seen the end or the final part of the recent manipulated Real Estate cycle or its aftermath.
DISCUSSION
Anyone else sensing something along these lines?
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