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Buying Up The Neighborhood

Big money investors are now buying up piles of homes, and whole neighborhoods. We’ll look at what’s happening with houses and the real estate market.

In this photo taken Tuesday, July 17, 2012, a single family home is for sale in the Hollywood area of Los Angeles. Americans bought more homes in July than in June and prices rose, the latest evidence that the housing market is slowly recovering. Sales of previously occupied homes rose to 4.47 million in July, a 2.3 percent increase from the previous month, the National Association of Realtors said Wednesday. (AP)

In this photo taken Tuesday, July 17, 2012, a single family home is for sale in the Hollywood area of Los Angeles. Americans bought more homes in July than in June and prices rose, the latest evidence that the housing market is slowly recovering. Sales of previously occupied homes rose to 4.47 million in July, a 2.3 percent increase from the previous month, the National Association of Realtors said Wednesday. (AP)

American housing – single family homes – went down hard in the crash. It was a wipeout in communities across the country. Then a tsunami of home foreclosures, and deep uncertainty about when and how the housing market would ever come back. Well, heads-up.

There are new buyers in town. Very big money – Wall Street players on down – right now buying lots and lots of single family homes. Thousands and thousands. It’s changing the market. It may change your neighborhood.

This hour, On Point: Big money moves into single family homes. Will you rent from Wall Street?

-Tom Ashbrook

Guests

Susan Wachter, professor of Real Estate and Finance at the University of Pennsylvania’s Wharton School.

Dennis McGill, director of research at Zelman & Associates, a research and consulting group focused on the housing industry.

John Gray, global head of real estate at the Blackstone Group, which has spent more than $1.5 billion investing in single family homes.

From Tom’s Reading List

New York Times “Perhaps no investment company is staking more on this strategy, and asking stock-market investors to do the same, than the one Mr. Miller is involved with, Silver Bay Realty Trust of Minnetonka, Minn. Silver Bay is the brainchild of Two Harbors Investment, a publicly traded mortgage real estate investment trust that invests in securities backed by home mortgages.”

Mortgage News “The opportunity for funds to buy homes at discounts could last less than two or three years, Gray said yesterday at the Bloomberg Commercial Real Estate Conference in New York as record-low mortgage rates and home prices down 40% from the peak entice individuals back into real estate. Atlanta, Phoenix, Las Vegas and other markets hit hard by the worst housing crisis since the Great Depression are rebounding as the economy improves and the supply of homes for sale shrinks.”

New York Observer “Mr. Gray, head of the real estate division at private equity powerhouse Blackstone Group, had just closed on the purchase of Mr. Zell’s Equity Office Properties. Blackstone had announced its bid the previous November, just 13 months after Mr. Gray had stepped into his new role. He had spent his entire career at the firm, so his ascent was not so surprising, and had managed 10 deals worth a combined $32 billion so far, so the territory was not exactly new. All the same, Mr. Gray was 37 years old at the time, and he had embarked on the largest leveraged buyout in history.”

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  • Unterthurn

    It’s just not big money investing in real estate. Know middle class who made it through the crisis unscathed and are now buying homes and condos instead of putting money in the banks or other investments. 

    • DrewInGeorgia

      What’s your definition of “middle class”?

      The massive buy-up of homes is a result of upper class investors realizing that most Americans can’t qualify to purchase a home any more. If they cant afford to buy, they have to rent. You’re correct that what used to be Middle Class Americans are doing something instead of putting money in the banks or other investments, that something is paying higher rent.

  • Pingback: Latest Atlanta Real Estate News | Matt Hester & Associates

  • Gregg Smith

    It’s a buyers market. 

  • Ben Cornforth

    Welcome to the new fedualism and land LORDS…..*sigh*

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    What a deal – make huge money from a real estate bubble – get bailed out from the resulting crash – and then buy up the aftermath at basement prices.

    It’s good to be Wall Street.

  • AC

    are there any laws and regulations about this?
    i have been saving to buy a second house and because it’s an ‘investment property’ they want lots more down, are people who buy in bulk subjected to this same rule?
    there must be laws about this…..what are they?

    • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

      The golden rule (he who has the gold makes the rules), and caveat emptor.

      • AC

        well pooh-pee to that. pooh-pee.

  • Flytrap

    This is just how the banks are trying to recover from the calamity of the CRA.  The CRA was foisted on the banks and led to the collapse of the housing industry.
      
    Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

    Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru

    NBER Working Paper No. 18609
    Issued in December 2012
    NBER Program(s):   AP   CF

    Yes, it did. We use exogenous variation in banks’ incentives to conform
    to the standards of the Community Reinvestment Act (CRA) around
    regulatory exam dates to trace out the effect of the CRA on lending
    activity. Our empirical strategy compares lending behavior of banks
    undergoing CRA exams within a given census tract in a given month to the
    behavior of banks operating in the same census tract-month that do not
    face these exams. We find that adherence to the act led to riskier
    lending by banks: in the six quarters surrounding the CRA exams lending
    is elevated on average by about 5 percent every quarter and loans in
    these quarters default by about 15 percent more often. These patterns
    are accentuated in CRA-eligible census tracts and are concentrated among
    large banks. The effects are strongest during the time period when the
    market for private securitization was booming.

    http://papers.nber.org/papers/w18609#fromrss

  • stillin

    In our nice, old, north country neighborhood, many people not known around here, called outsiders, are coming to look at one of our neighbor’s old homes. Here’s why we don’t want them. They have NO interest in the home, NO interest in what kind of people they will “rent” to, NO interest in us, their only interest is in the God MONEY. Here’s my Christmas message to them, go away, go far away, and don’t come back.

    • harverdphd

       The problem, stillin, is that the North Country like most areas in NYS is dying a slow economic death.  Relatively speaking you have NO MONEY.  The people driving by have MONEY.  To buy property takes MONEY.

      • stillin

        do you mean the north country has no money? Because personally? I actually do, that is why I own my home. And love it too.
        Subject: [on-point] Re: Buying Up The Neighborhood

  • Ellen Dibble

    What about the Chinese?  We used to worry about countries we are indebted to owning us, and we renting from them, one way or the other, by mortgages or more portable sorts of housing.

  • glenninboston

    The mistake we often make is to blame the federal government for the problems of capitalism, when in fact, the problem of monopolies is often very local. (how often do you travel five states over to buy a shirt? or some glassware?) Local governments by ceding so much ‘real estate’ to large corporations are creating an un-competitive environment and further pricing people out of the market. If we don’t deal with this, we will end up as a rental society…Cities and towns should limit real-estate ownership within their borders to ensure prices remain competitive.

    • http://profile.yahoo.com/QMDZ3LH5U2B4GAT7J2HS4TCP6E Jim

      I partially agree and partially disagree. i agree with you we are going to be a rental society. However, i do think the market force is too strong to make monopolies possible. in fact there are too many homes for investment funds to swallow. our Fed is the biggest culprit. current mortgage rates are artificially kept low to support the lack of fiscal policy performed by the derelicts in Washington. 

      But i believe once the demand is not there, housing price will go down.

      Besides.. there is another factor you should consider. our society is being forced to be mobile. everyone needs to be nimble since our job market is not at full employment.

      • glenninboston

        Thanks Jim, I don’t disagree that their are several reasons for the inflated asset costs, of which fed policy is one (I agree with your point on the artificially low rates), tax policy is also a culprit (mortgage deductions, federal guarantees of mortgages) as are lax local regulations. 

        This is simple supply and demand – if one company controls a majority of the supply (the article quotes entire zip-codes) they can better control the price. 

        As for the more mobile society, as someone who is actually a mobile worker, I’m not sure that people need to be as ‘geographically’ nimble as you suggest. In fact, I can work from anywhere on the globe, if I chose…that makes choosing any one place even easier. I can work for a company in Asia right from Boston…

  • JAIBEEZ

     
    It’s all part of the plan…use money which doesn’t actually exist (trading) to crush the housing market, and then use those gains to buy tangible infrastructure.
    No one said the devil wasn’t brilliant

  • AC

    can you talk about the FOREIGN entitities taking advantage? which and why? also the laws/regulations on that too
    thanks

  • Peter Van Erp

    When the smart boys in Wall Street head for single family houses as their latest investment, I have only one question: How can I short this idea?

    • glenninboston

      clever…

  • Joseph_Wisconsin

     In 2010 the top 1% had 35.4% of all wealth, the next 19% had 53.5%, and the remaining 80% had 11.1%.  Removing wealth in the form of home ownership from consideration, and the numbers become top 1% had 42.1%, the next 19% had 53.5%, and the remaining 80% had 4.7%.  

    The process of the top 20% acquiring virtually all the wealth in the United States will certainly continue under economic and taxation policies set to their advantage, and this buy up of real estate is just part of that.  The push to make all states “right to work” which has the net factual measured effect of lowering median worker wages by 10-15%, and increasing the number of workers without health insurance is another push for the benefit of the top fifth.

  • glenninboston

    Doing it very close together also helps them increase prices more by cornering more of the market. The gentleman didn’t mention that. I wonder why?

  • Michiganjf

    I’m curious…

    Wall Street wealth pretty much created the housing problems, now they’ll be the one’s jumping on profits from the rebound.

    Just how much of the risk they’re now taking on is backed by taxpayer dollars?

    Thanks!

    • Flytrap

       http://papers.nber.org/papers/w18609#fromrss

      • TheDailyBuzzherd

        Oh yes, YES it did. Banks were all for it. MUCH more money to be made in subprime than prime mortgages. Banks were NEVER the victim in that, despite all the spin to the contrary. Read.

  • kathleen fraser-hession

    Absentee landlords= slum neighborhoods.

  • glenninboston

    Nice! Play the populist card! He’s doing it for the people who can’t afford to buy!!! (he’s missing the point that he’s raising the costs of ownership in the local markets)

    Not that I’m so disingenuous as to say that there aren’t benefits for this type of investment. 

    My only point would be that local governments should limit ownership percentages within their zip-codes to maintain the local competitive landscape.

    • DrJoani

       GLEN, IT’S ALL ALTRUISTIC!Just helping the market along…so kind, so generous, the way Romney and faithful  like it.
      We paid for the bailouts and now we pay for the buy ups. Maybe Karen will benefit (see above comment)and *’m glad for her

  • stillin

    Here’s what the guy on the phone makes me want to say ( blackstone outfit) spoken like a true absent landlord…we really feel like we can make a killing out there, on your misfortune…we seriously don’t give a rat’s ass about anybody except our profit, and let me further translate…my friends and I have access to a ton of money, and after we sell you our “we’ll be good for you” bullshit, we can then take you and your home to the cleaners too…that’s all that is. That’s EXACTLY who and what MY neighborhood can do without.

  • http://www.facebook.com/people/Paolo-Caruso/1778940602 Paolo Caruso

    Ciao America !!  Corrupt Wall Street should have been bankrupt but was bailed out with taxpayer money, while millions of families  lost their homes.  Now Wall Street supported with near zero interest of unlimited funds from their pals in the Federal Reserve ( pension funds?? haha) are buying up homes that are for families.  Italy got rid of feudalism a long time ago.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    And the US middle class shifts from owners to renters.

    I wonder how well single families will be able to compete with these huge companies when it comes to buying homes?

    • glenninboston

      Right point, they can’t.

    • glenninboston

      Right point, they can’t.

  • http://www.facebook.com/profile.php?id=626159812 Karen Ferguson Johnson

    I’m so glad to hear that SOMEONE is doing SOMETHING! My husband works for a company that transfers mid-level and high-level management frequently. It doesn’t make sense for us to buy a home, and I wasn’t looking forward to living in small, cramped ‘starter rentals’ as he progresses at his company. I’ll be keeping track of this company, and hope that we can work with them in the future.

  • Dori_TalkNation1

    This is a disincentive for banks to provide homeowners with federally subsidized HAMP loan modifications. Also, realtors and developers can now have a much broader impact on town and regional politics, they can work collaboratively then to help force through privatization: especially of WATER and other utilities that local homeowners have been fighting.

  • Human898

    I’m afraid we’re seeing just another angle on how some will jump in to “solve” problems at great profit to themselves in the short term without studying or thinking about the long term impact of what they are doing.   I see this leading a whole set of other problems as deep or deeper in the future than the crisis we have just experienced all in the “name of” doing good.  Yes, doing good for those who will make enormous short term profits then walk away with those profits when a problem occurs that makes things unprofitable for them.

  • Virginia Munro

    Sounds like Pottersville to me.

    • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

      Exactly. I think there also would be strong incentives to raise rents on the expectation that people will not want to relocate again and would be more willing to pay more instead.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    I live in Boston – there’s no way I could rent a home here cheaper than my current mortgage payment. And currently over $500/month of that payment is principle and adding to my equity.

    • ToyYoda

      I live in Boston, I rent.  My rent is pretty cheap at $800.00 / month.  I’m thinking about buying.  If you don’t mind, how much is your mortgage and what neighborhood do you live in?

      • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

        Rozzie – ticky-tacky 3 bedroom for about $1400/month which includes insurance and taxes.

        • ToyYoda

          Thanks for the info.  what you think about Mattapan?  I saw some nice house, in a surprisingly nice part of Mattapan.  Yes there are such places.  My friends say not to buy it because it’s next to a cemetary, but that doesn’t bother me.

          • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

            Location, location, location :-) Once you get outside Beacon Hill and Back Bay, all the Boston neighborhoods have good and bad spots. It really comes down to which street.

            Depending on the cemetery, it could be a plus – some of them are beautiful. And they are always quiet :-)

          • stillin

            I think a cemetary is perfect for what is next to you and here is why…the number one reason people move, is neighbors, as in asshole ones…so with the cemetary I agree with oldman, it could be nice and quiet and hey, no problem man.

  • http://www.facebook.com/jonathan.c.frank Jonathan Charles Frank

    unfortunately, tom, you have provided yet another opportunity for the big money boys to blow a lot of smoke. here is what needs to happen, even though it is probably already too late. the poor individual homeowners who got caught in the bubble years deserve a bailout, just like the banks got one. until that happens, this great investment opportunity is nothing more than the haves taking advantage of the have nots. the obama administration needs to make this right in the next four years, or he is nothing more that a bush clone.

    • Steve__T

       Had the government given the money to the homeowners at a 0% rate, like the banks get, more would have paid off their debt. but as we know they gave the money to the banks instead, and bang. The many loose, and the few get rich on the many.

  • http://www.facebook.com/people/Bridget-Russo-Elmeniawy/583792868 Bridget Russo Elmeniawy

    I sold my home via shortsale to one of these companies and am now renting a home directly from the owner.  The problem is that when someone can’t afford their home and walks away via foreclosure or short sale, their credit is ruined and it’s almost impossible to find someone who will rent to you. I was very lucky to find the home that I found to rent and am extremely happy paying half of what I used to in rent.

  • cpemail

    Owning a house should be a human right, no one should have to pay mortgage or rent.
    The house could be managed by the city, and owned by individuals who should only pay taxes at the current rates.
    The owner can do any  upgrades he wants, but once moving out of the city should leave the house behind for the city to allocated it to someone else.
    Now is all business, banks own everything and the so called owner pays mortgage and taxes for the real owner; the bank.

  • glenninboston

    The big investors will think it’s “worth painting the trim” until their stakeholders start complaining about wanting better margins…

  • Lisa Winkler

    The banks, wall street, investment firms created the housing disaster while all profiting from it. Now they are all profiting again. Many homeowners that have lost their homes are having a hard time finding a rent, and now can’t get a home loan with interest rates so low, it’s cheaper than renting. 

    Isn’t this the greatest pyramid scam ever? How can we allow this to go on? 

    This is on par with any Bernie Madoff scheme. 

  • http://www.facebook.com/people/Paolo-Caruso/1778940602 Paolo Caruso

    Americans are renting because the banks won’t even look at them to lend.  But these scmbgs on Wall Street have access to all the funds they want at the lowest interest rates.  The kicker is that all this funny Fed Money while making Wall Street richer will eventually leave the rest of the USA with hyperinflation.
      
     

  • Human898

    I agree that the housing crisis we just saw involved greed on some level by all people who used their property as a liquid investment instead of something they would get use and enjoyment out of over the period they owned it and any appreciation was coincidental.   Thinking of real estate as an investment instead of as a purchase of a use is what has gotten us into trouble in real estate bubbles.  We all want to recover our money from what we put into it, but look what happened with all the “professionals” that were “in charge” before the crash and all the “professionals” that are coming in now.   Prices shouldn’t be rising on real estate until all the inventory that is for sale has sold.  I have seen all the real estate problems coming in the last 30 years and based on what has been done.  We keep going back to doing the same thing in general, which is to look at real estate as an investment, not a use.   Looking to increases in housing prices as a “good” sign is a problem.   Housing is a need, not an investment that anyone is going to be able to liquidate when there are no buyers to be found to buy at the too inflated values.

  • johnsloth

    Pottersville indeed! The advantaged and bailed-out get yet more advantages while those of us with no bail-out in sight are at their mercy. Transparent feudalism.

  • sssparksss

    how would you look at this if it was hospitals..?

    what happens when the market goes south..?

    who holds the bag..?

  • Michiganjf

    For people like the woman who called in, blaming buyers instead of Wall Street for the housing bubble and subsequent downturn, please listen to this award-winning, amazing little one hour program:

    http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

    • harverdphd

       You keep bringing that episode up…the people who bought homes ADMITTED they were lying when they promised to pay…

      • stillin

        no offense but you sound like a whack, do you work in the prison system by chance?

        • harverdphd

           So that’s what you think of corrections employees ?

  • Ellen Dibble

    There needs to be attention by architects and engineers about shared housing.  Where I live, the oldest houses are often multi-apartment, and the landlords could free up tenants to find their own equilibrium in finding compatible groups, and tending to maintenance, allowing for mobility according to need, and creating wealth in their own ways, whether in their private businesses, or in their savings.  A lot of us have no more desire to own a house than to own a satellite.  It’s a waste of time, and prevents lots of investments that we might see as inspiring.  Condos, whoever created that idea has the worst of all worlds.  You can’t depart if your neighbors are incompatible with you, or if the property turns out to be Love Canal.  You have to deal with all the problems, and you aren’t free to skip out.  Someone presented to me that the social side of that was positive, and I thought to myself, you haven’t lived in an apartment building to know what kind of difficulties can arise.  You try to deal with it, you try to get the landlord to deal with it, and then somebody moves.

    • DrewInGeorgia

      I moved into an apartment complex with a co-worker when I was sixteen and I vowed I would never do it again. Call me anti-social (I don’t mind) but I fail to see how anyone can think that having a screaming baby to your left, an arguing couple to your right, stampeding kids above, and a barking dog below has a positive “social side”. Positively crazy maybe.

      • Ellen Dibble

        See, in a community with plenty of rental housing, you could move right out.  And with suitable networking available, and rental agents who know their business, you could have been placed in rental housing that did not have those things to deal with.  The problem where I live is that new rental housing does not go up.  Instead the price of the rental housing already in place goes up.  So incompatible people are forced to live together, and eventually forced to buy homes, whether they want to or not.  
             To date, the developers who put up multi-family homes have looked to take advantage of the tax advantages and I think mortgage rate advantages of putting up “affordable housing” rental units, which work fine for a certain slice of people, but are not designed for people who are saving to buy their own home, or people who are trying to build a nest egg for this or that, a business, college for children (or their own), and though intended for teachers and fire-fighters, they say, in fact teachers and fire-fighters have incomes that banks take note of and respect, and can allow those people to use that same percent of their income to buy value in their own homes.
            So policy has worked against creating bountiful and successful rental housing communities.  But yes, plenty of people relocate because of the renters around them.  Personally, in a building with ten units, there are rarely more than one, at most two units, that are an issue.  Mostly they are a first line of defense against all kinds of ills.

        • DrewInGeorgia

          I don’t disparage any who rent, my experience was just extremely negative. There were roughly a hundred units in the complex I lived in and rent was relatively low so that likely explains a lot of the problems that I had. Cheap construction to include paper thin walls didn’t help matters either. I don’t know, it is just hard for me to imagine that stacking a bunch of people on top of and around each other in close proximity is ever a good idea. Again, I’m probably just anti-social.

          • stillin

            or sane.

  • http://profile.yahoo.com/OTS4VDGOTLQ33IPO53WXUUKNEI Mike Arnott

    Just like the last crisis, somehow this is going to go horribly wrong for the  Middle Class of this country. Wall St. will milk this as-well-as any government housing programs that they can, figure out HUGE tax-breaks to shelter their profits and then pull out when profits slow and dump another crisis on the people of this country. I’m writing the date down so I can replay the Om Point archived show as a “I told you so” moment!!!!!!

  • spirit17of76

    I am very concerned about the corporate take-over of single family housing.  Instead of citizens owning homes, the profit motive will rule.   Again.   Isn’t this how we got into this mess in the first place?  Through speculation on housing so people could make profits from homes instead of living in them? 
    Just last week, I believe, one NPR show (Market Place perhaps?) covered the difficulty that prospective buyers are having buying homes.  Even those in solid financial circumstances who have made repeated bids on different homes cannot get an agreement in this market because big players look more appetizing to sellers.   I see bad things in this future. Fiscally sound families are being constantly outbid by big investors who are scooping them up to turn them over or rent them out. The corporatization of everything in America is not good for real people.
    Homes are for people to live in, not for profit.  As prices are jacked up they will become more and more unaffordable for families.   The people who need homes will be marginalized and pushed farther away from a sustainable lifestyle.  Keeping families in their homes is the way to go.

  • Thinkin5

    Bankers and investors make mistakes and get in over their heads too. I have a low mortgage and as I consider selling and renting I’m seeing very high rents for small spaces. Renting isn’t always a bargain and rents can go up too. The vultures are sweeping as usual.

    • Ellen Dibble

      The thing is, renters can decamp pretty easily.  One year’s Montmartre is next year’s magnet for the rich.  They say this is an unstoppable kind of metamorphosis.  A fine place to rent quickly becomes so attractive that those who were there have to leave.  So the issue is:  How to create new rental clusters.  I have to notice locally that town planners like to zone in “grandmother apartments,” attached to single family units, which do not create any more demands on the school system, and enable those single family units to be more self-sustaining and less likely to foreclose.  But planning boards seem to view rental housing as “party buildings,” where nobody is settling down to work.  We create noise and smoke and sometimes fire.  Never mind that we the rental housing are far more profitable in terms of the town coffers because people with children usually are in the single-family housing.  Never mind that if these communities are nurtured rather than sidelined we become the seeds that cities badly want to nurture; still some of the little communities that could very nicely incorporate inexpensive (yet charming) rental housing say straight out that they don’t do that.  Period.

  • Thinkin5

    Meanwhile, the billionaires and Republican governors fight to keep unions out and wages low. That will keep people from buying their own homes or condos. They are strangling the middle class.

    • DrewInGeorgia

      Right to Work.
      Right to Rent.
      Right to Serve.

      • Human898

        Where is there no “right to” of any of what you have listed?

        • DrewInGeorgia

          Please clarify, I’m easily confused sometimes.

          • Human898

            Perhaps I took your list in the wrong way.  Maybe if you clarify what you intended by the list?   My question was about where anyone was denied a “right to work”, a “right to rent” or a “right to serve”?  Hopefully that helps a little. 

          • DrewInGeorgia

            I’m still confused, it’s okay though. My meaning was basically that these three rights are what we’re being told to embrace as a replacement for silly things such as “Life, Liberty, and The Pursuit of Happiness”. It’s kind of like someone giving you a bag of dog-pooh for Christmas and then telling you you’d better be grateful for it because you could have gotten nothing. Don’t know if this is the best way to state it but it’s the only way that I can think of at the moment.

          • harverdphd

             Sometimes..?

      • stillin

        I so agree! Like serve as in serve on the plantation, you know, work till you die and work like a workhorse and you know…plantation style 

  • DrewInGeorgia

    Something I also haven’t heard mentioned is the true definition of ownership. If you purchase something, say a home, you should own it right? It should be yours until you decide to sell it or give it away. Don’t property taxes preclude true ownership? Home owners who have completely paid off their property are still ultimately renters. That’s the silver lining in the Land Lord convergence though isn’t it Vulture Capitalists: If you rent you don’t have to pay property taxes. We’re so fortunate.

    • Ellen Dibble

      Next time your landlord’s property taxes go up, you’ll find out who actually pays those taxes.  And no, it is not tax deductible on your 1040.

      • olderworker

        Except in Massachusetts, which does recognize that renters pay their landlords’ property taxes and you get credit for it (if you itemize)

    • harverdphd

       And you are so clueless.

    • stillin

      DrewInGeorgia, this harverdphd is really a rude writer,  I have heard some responses that make me reeeeally glad he is not my neighbor…and calling himself harverdphd is probably a wish since harverdphd’s don’t usually call people names…like “clueless”””duh harverd you better go back to grade school.

      • DrewInGeorgia

        I’m good with clueless. harverdphd knows everything and I know nothing, I wouldn’t have it any other way. People who just know they know everything don’t know anything. As for harverd’s moniker, I would imagine it is meant as an insult to people who do actually have degrees. Incorrect spelling and all lower case lettering are a dead giveaway. Yes I know I over-thought it, I overthink everything. lol

        • harverdphd

           So you agree…you ARE clueless?

          • DrewInGeorgia

            Absolutely. I have nothing of value to say so you should completely ignore me.

    • olderworker

      You’re not a “renter” just because you pay real estate taxes. In fact, if you are a renter, your rent includes your  landlord’s real estate taxes, you just don’t notice it. The biggest difference is that you cannot be thrown out from your owned home as you can from a rented one. 

      • DrewInGeorgia

        I said ultimately. Will or will not you lose your home if you fail to pay your property taxes? If so, you don’t truly own the property at the time you purchase it. I am aware that those who rent pay the property owners’ taxes. The point was that not paying property taxes is a ruse. It’s like the not being stuck with maintenance ‘benefit’ or the ‘benefit’ of not having to worry about being stuck with property if you need to move.

        You can be thrown out from your owned home as you can from a rented one, it just takes a bit longer.

  • Human898

    How can the guest say Wall Street being involved is a good thing?   Wall Street was involved before and look what happened in the longer term.   What needs to happen is to let prices deflate to where they need to be.   In all of the mortgage and real estate problems we’ve had in the last 30 years, the “solution” has been to go back to doing what created the problems in the first place which was to look for ways to force real estate appreciation instead of see real estate appreciation as a coincidence of use and real added value, not intangible and hyped value for the sake of driving a real estate “industry”.

    Using real estate as an investment is a mistake and we’ll go through inflating and popping bubbles until we realize this.

    • spirit17of76

      Yes.  Using real estate as an investment on a large scale is an unnecessary, unwise commodification of a basic human need for shelter.  It is a problem.  Prices are artificially inflated and the end user – the person who needs a home – is the loser, while the investers get just a little richer every time.

      When profit becomes our highest value, we lose our ethics and for those who are Christians, our Christianity.  We arrived at the recent financial collapse through carelessness about what is good for ordinary people and a focus on what will make us rich no matter the fall-out.  Housing-to-get-rich-from instead of housing-to-live-in is not the way to go.  We need to learn from the investment bubbles in housing that just nearly brought us down.  We need to stop the craziness and look at the big picture, our national well-being.  We need to do the right thing and create public policies that will support that.

  • stillin

    I love owning my home, it is my refuge from the insane world I see when I step out each day, except for nature.

    • DrewInGeorgia

      Nature is the true refuge, we seem to be trying to remedy that though. Where will we hide if we win the War On Nature? It scares me to think this way but I’m personally waiting for Equilibrium to kick in full force. Wonder if we’ll survive the Great Balancing that is most certainly in our future.

      • harverdphd

         What a bunch of poppycock…have you been to Massena lately?  Nature is taking everything back.  North Country farms are gone, crop fields overgrown, industry gone, factories closed and collapsing…you need to get out more.

        • stillin

          I hope nature takes it all back, and all the outsiders with it, leaving me here with my humble little beautiful home thank you very much.

          • harverdphd

             Your wish is granted….*

  • Human898

    I believe one of the problems our nation faces is a failure to articulate or recognize, perhaps to acknowledge where the real problems lie.  It could be a factor of unprecented attitudes of greed which have some looking strictly for ways to profit without considering, purposefully or by ommission of thought to consider the social, environmental and longer term enconomic impact of their profit taking plans and activities.  Yes, businesses have an obligation to investors, but don’t investors and businesses also have an obligation to society to not do harm to that society in the short and the long term?   Shouldn’t good business practices all have a beneficial long term impact, not just for the society or the world they operate within, but for the longer term survival and success of the business?  

    If one sucks all the life out of whatever it is that provides them nourishment, where is their ongoing source of that nourishment?   How businesses fire and lay off many thousands of employees to “save” money, then not hire them back or hire cheaper labor, then wonder why the unemployment rates are high or their sales are down, is beyond me?  Why aren’t we connecting dots?   Are our noses too close to the page or is it we don’t want to “see” anything that is going to take away from maximizing benefit and profit to ourselves?    Are people that seem to need to eat all the food on the table simply because it is there going to begin taking no more than they need or are they going to present any angle they can to defend their eating all the food on the table?  

    I’m a bit amazed at the greed and gluttony I have seem demonstrated by people who also claim to be solid Christians considering what greed and gluttony are considered in the Christian ethic, but perhaps all one needs is a good snow job or marketing plan to convince people that being a good Christian is to praise all things greedy and gluttonous.

    Having said this there are many many people out there whose actions have brought them great fortune and material or monetary profit, yet they give the vast majority of those fortunes away to those in need and for the advancement of humanity.   These are the people that seem to demonstrate the teachings of Christ more than any, yet they are not the ones shouting to the world how “Christian” they are in words.   Their actions speak louder than words.    

    Slavery is capitalism and there are many examples of people in history capitalizing in many ways that much of humanity has evolved to view as inhumane.   Slavery and other activities still exist for all those working to remove them as a means of capitalizing on human enslavement or tragedy.  

    To conclude, Wall Street and profit are not necessarily dirty words, what is dirty are the things some humans will do in order to profit themselves and the harm some will impose upon others in the name of profit and great material wealth which in a strange ironic or oxymoronic dichotomy of admiration and distain at the same time.  

    What we may need is a huge dose of introspection and alignment of ourselves with what we claim to be our higher humane values and apply them towards others as we expect others to apply them to us.

    History should show us many lessons about mistakes to avoid, yet we constantly seem to ignore history and dive right back into doing the same sorts of things that present the same sorts of problems.   Isn’t survival all about learning from mistakes that have harmed us and could have harmed us a lot more and not repeating the actions that led to those mistakes?   Great profits and pushing the limits of big…big…big power, control and profits present a challenge, but why forget the challenge of being able to push such limits without causing harm to the greater society of humanity in the process of trying to meet another challenge?

    In a world that has been shrunken by proportionate population to the size of the globe and technology that connects all corners of the globe almost instantaneously and though reduced transportation times and challenges, we appear to have forgotten or not taken the time to adjust to the impacts of both population growth and the reasons for it, as well as the impacts of modern technology, studying, considering and coming up with solutions for the negative impacts instead of only selling the positives and ignoring the negatives.

    • TheDailyBuzzherd

      Human: “… where the real problems lie.”

      Banks. Banks + US Gov’t working on banks’ behalf. ’nuff sed.

  • Jamez

    What about Me? What do I need to do to participate in an auction that will get me a home for a very reasonable price? Compete with someone who has ALL the Money? Where is the fairness in that?

    • harverdphd

       If you can’t buy a home without a “very reasonable price”  you shouldn’t be looking in the first place.  But if you really care, do your homework.

      • stillin

        I think you  need to do your homework, Harvard is with an a not an e.

        • harverdphd

           *snicker*

      • http://profile.yahoo.com/A6JKPKPZLFCGB5EURTNUNTGDXY Laura

        And you shouldn’t be under the illusion that you rule the universe.

  • stillin

    Earlier this year, on NPR, a mortgage specialist was on, I think he was out of Yale, who said, he had developed a one page refinance sheet that many homeowners could have done. The banks fought it, had it, should it, get support, it could help many who don’t have the credit, but could use the break of refinancing while they still own. I emailed him he made such sense, and a one page form!!!! Way too perfect and too great for us, we need that complicated nononononono form.

  • stillin

    In our great, old, north country neighborhood, we have a yellow house. It was the first school house in our town, Massena NY. The people who lived in it were top notch, nice, sweet, educated. We went in and out all our lives , at their home, they did the same, everybody in our neighborhood did. That was the way it was. The yellow house, was painted yellow, white and blue inside, it was gorgeous. When the man died, and the woman was sent to a nursing home, the house got snatched up, rented out. I spent my entire summer calling every law enforcement agency in NYS including child protection from the screaming, yelling and threatening I heard daily there. Cars came and went, fast deals went down, a level 3 sex offender was forced out from my actions…thank you. Now, it sits empty, like a RAPED home. It has been abused, ruined, crapped on inside and out…and I feel for it evey time I pass it because I know what it WAS when it was cared about. Recently, car after car pull up and photograph it…they”represent” an outside interest. Yup, and trust this, ain’t NOBODY ever abusing that house again as long as I live in MY neighborhood, and you can take those words, to the bank.

    • harverdphd

       Because you’re going to……..?

      • stillin

        those are your words not mine.I never wrote “because I am going to”now did I? You may need to read slower.

        • harverdphd

           “… ain’t NOBODY ever abusing that house again as long as I live in MY neighborhood, and you can take those words, to the bank”….so what are you saying?

  • TheDailyBuzzherd

    So, where does this all end? You mean to tell me that ONCE AGAIN the positive numbers in home sales partly are due to this sort of activity? Boy are we screwed …

  • miles dizzy

    What is not been talked about is that the bulk of the money flooding into the US real estate market is from cashed up chinese and asian investors. This needs to be regulated and controlled, not allowed full rein to price US homeowners out of a home.

    • glenninboston

      Let’s not fool ourselves, the Chinese are WAY too smart to buy US real-estate….(besides, does it matter where the money is coming from? rich Chinese, rich Americans, what’s the difference? they’re both taking advantage of average Americans…)

  • OldObserver2

    Make no mistake guys, this smells.  My bet is that this is yet another attempt by Wall Street to create a bubble (or at least higher home prices) and then get out before the average person knows what is happening.  If it creates another earthquake in the economy, it’s not their problem.  This has been the historical pattern of how financial firms make money.  They have neither wanted to nor been good at providing real goods and services for what they consider pitiful profits.  Why would they start now?

  • olderworker

    Tom, you sound so shocked that someone would live in rental housing!!! I lived most of my life in rental housing (though my parents did own a co-op apartment, in Chicago, when I was growing up). I finally bought a condo in 2010, lured by the $8,000 the government was shelling out to new home buyers, and I do have some regrets. I am now my own landlord, which means I have to pay for all repairs/maintenance, etc. 

  • TyroneJ

    The commoditization of housing as covered in this episode is not new. However, each rental unit represents 1-2 voters, sometimes even more. A given “landlord” on the other hand, represents 0-2 voters TOTAL, regardless of the number of rental units. The result has been seen many times in many communities before. If a community starts being dominated by rental housing, the local politics starts being controlled by the renters.  This is in fact how “rent control” became instituted in various communities many decades ago (e.g. Cambridge MA, Santa Monica CA, San Fransisco CA, parts of NYC). Rent control has its own negative repercussions, the damage of which often takes decades to accumulate to levels requiring a response. Hence the communities mentioned above which instituted rent control eventually ended up reversing it a couple of decades later.

    It would be interesting to know how these new companies getting into “the landlord business” factor the risks of rent controls being implemented into thier business models.

  • http://profile.yahoo.com/UOCUG37XHOFUFYS6NDRNHVA6HY Flynn Henigan

    There were obviously excesses by both the banks and the general citizenry. However, the banks were saved, while the citizenry was not. It seems to me that the politicians of this generation have sold out to such an extent that they’re merely corporate representatives. Now my generation will have lesser opportunities, less chance to build equity, which probability-wise will turn us into a debtor generation, which (wouldn’t you know it) the banks will be in perfect positioning to ‘aid’ us with.  -Flynn in Chicago

    • BobK71

      The generational excesses started way back with the World War 2 generation.  By the mid-60s we had so much debt that our European trading partners were demanding to change their dollar reserves into gold at the govt. fixed price of $35/ounce (until the US govt. was losing too much gold and closed the gold window in 1971.)  Since the end of the war we have always preferred the easy path to the right one.  It was just that we had so much national strength in reserve at the beginning that we didn’t notice any problems.  We have been down this path for so long that one day, nothing will be easy any more. I’m hoping that, perhaps, at that point, we will wake up and do the right thing.

  • http://profile.yahoo.com/A6JKPKPZLFCGB5EURTNUNTGDXY Laura

    Way to softball that show Tom Ashbrook. Another bit of our freedom gets eaten up by corporate interests. And we the people will go right along, just like with the housing bubble, because our media doesn’t understand big picture economics. Guess where this goes folks? No pets. Huge fees for breaking the rules. This is a terrible thing.

  • SomebodyCaresWWJD

    I have worked for general contractors and have taken care of maintenance of the houses owned and managed by companies just like Blackstone since 2009 and have witnessed the negative side of what companies like these are doing to our neighborhoods. Sure, they put money into it right away, but only because they have to if they want someone to pay rent and have the house pay for itself. There’s no time to waste.. investors have to get someone in a “buy and hold” investment property right away or they are losing precious money. Or, if they are flipping, it’s the same thing. Flip ASAP so that they money can be leveraged for another or maybe two. My issue with these big investment companies is that when a replacement of something is what any good home owner would do, a cheap repair takes place and a temporary bad aid is put on. Bad enough, it is usually an illegal method of doing things. Permits are another thing. If these companies really want to care for these communities and residents then why aren’t they pulling permits for re-piping houses, replacing water heater, replacing air conditioners, installing new water main lines and on and on!! It’s usually easy to cover up and not on anyone’s radar. There is no accountability for these people. It’s obvious the incentive is the money. Not only are they sitting on these homes waiting for the market to go up to sell, but they are also receiving government incentives for what they are doing. This is just one more reason why the rich and poor gap is widening in this country. I really could go on and on about these companies and bring a lot to light, but I’m just one comment on a big board hoping someone will hear. I would vote to let the residential market go another route vs. letting our neighborhoods being owned by investors. I work with plenty of those as well, and let me tell you, it always goes the same way. One good investor said it just like this to me. “Once we sell the house as is.. we won’t have to worry what happens after that.” Someone fix this because it’s not gonna be good in the end.

  • Tyranipocrit

    Daniel was right.  Our culture is predatory.  This is class warfare–NOTHIBNG nore.  They had this in mind when they started the subprime crisis–they always had these foreclosures in mind.  America is under the thumb of structural adjustments and the corporatocracy.  Austerity.  Union bashing.  Patriot act.  Erasure of all democracy. (democracy cannot exist in a monetery system).  outsourcing.  erasure of all beefits.  Walmart dominating the supply chiann–all products dumped on us from china by walmart and others.  Our homes stolen and foreclosed on with out any sympathy, empathy, or attempt to save them.  millions in prison for minor offenses or none.  the highest homelessness rate in the world.  the highest impriosoned rat ei the world.  They should be helping htese people, not evicting them.  Its actually against th elaw.  The lonas they borrowed were mad with out consideration.  Money is not real.  People give up collatoral and interest but bank s give nothing towards the deal.  they make a a loan on momey they dont have and doesnt exist.  If the sherriff evicts you break in change the locks and tell him to bite it.  When he arrests you agin, go back break in and change the locks.  You put more than enough intpo that house–the bank oput nothing.  It is yours.  We are all slaves to the corporatocracy who hate you.  They must hate you in order to treat you as lesser beings.  In order to commit crimes against humanity, to urn your heart cold, to make deals on wall street without any consideration of how it impacts man and country, you have to not care–so they purposefully teach themselves to hate people–the other, the poor, the non-aristocrat.  They own our food–gm–our homes, our land, our means of production, our rights and our lives–you are slaves and zombies.  Wake up.  And take them out.

  • Eric Larson

    This whole argument of trying to place blame on home buyers in over their head is stupid.  The banks and Wall street provided people the opportunity to ruin their lives and as professionals they knew full well that those people couldn’t afford it.

  • Regular_Listener

    I am only partway into the show, but this looks to me like a bad trend.  Instead of prices falling to what their levels should be so that
    working people can afford them, a big hedge fund is stepping in to buy
    up the properties.  Instead of having family owned houses, now more and more Americans will be renting from a huge, Wall Street backed corporation, who will of course be profiting from the arrangement.  At least Mr. Gray was honest and upfront about what is happening.

    I thought big financial companies generally stayed away from owning houses.  I guess they don’t see opportunities for better profits elsewhere.  There is the chance that some of these company-owned neighborhoods could turn into slums pretty fast.   I hope that working people fight back by avoiding these rental houses and continuing to pursue the American dream of home ownership.  This isn’t what America needs – what we need is more decent, reasonably priced apartment housing.

  • http://www.facebook.com/profile.php?id=582761784 Miela Klinks

    We are trying to buy a house (we currently rent a 700 square foot duplex), so we can start a family.  Unfortunately we are falling prey to investor and bankers.  Last house we tried to purchase we bid $20,000 over asking price only to learn there was 55 other offers!!  The last house before we had 19 other offers. In Charlotte houses are rarely sitting on the market for more than a week with out an offer.  I believe this is causing us to be priced out of the market.  Currently 1200-1400 square foot houses are going for $260-$330k.  Eff the bankers.

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