July 31, 2015 | Updated 12:31pm

E-mail Address


This Little Piggy Went To Market, This Little Piggy Stayed Home…

The Wall Street Journal’s Developments Blog has an interesting post about the major Wall Street investor interest in the residential housing market. Though investment vehicles like REITs are by now a well-established vehicle for investing in commercial real estate, analysts like former Morgan Stanley-r Oliver Chang have been proclaiming for years now that the housing crash is a perfect time for the big money boys to start bulk buying residential properties. After all, the First Law of Investing is “Buy Low, Sell High,” and the crash produced lows in home values across the country that hadn’t been seen in years, and might never be seen again, since historically homes have held their value far better than almost any other asset. With many investors left with cash on hand and many normal people unable to enter the market because of tight underwriting, high unemployment and their current homes being underwater — any many long-term projections suggestion a permanent increase in renters over owners — analysts argued that investors could and should step into the gap, stabilizing the market while snatching up good deals for themselves.

But as Developments reports, even enthusiasts like Chang appear to be cooling somewhat on the prospect for large scale residential investment as the market begins to recover. Though there’s been a lot of coverage of investor’s potential to turn around the market, evidence of bulk sales seems thin on the ground in much of the country. Fannie and Freddie have been slow get to get a bulk sales program off the ground for their distressed property, which is a pretty big obstacle, for one thing. And while there have been a lot of reports of investor interest helping spark the strong recovery in some of the places hardest hit by the housing crisis, like Arizona, it’s less clear what role they’re playing in other areas.

On the other hand — and as Banker & Tradesman has reported — it’s undeniable that cash sales are up here in Mass and have been for the past couple years. And house flippers are back in action, too. So how much influence are investors having on the recovery? It’s a pretty important question, since many studies suggest the that investor money is fickle — unlike everyday buyers, who usually purchase or sell because of life event and plan to stick around for the medium term, at least, if the investment equation changes, investors can turn on a dime and pull out of the market. And that could put dent in our recovery.

Leave a Reply

You must be logged in to post a comment.