Everybody wants a bank deal or government freebie! From HW:
Investors are extremely enthusiastic about acquiring Fannie Mae, Freddie Mac and Federal Housing Administration REO properties in bulk and renting or selling them, Amherst Securities Group said Friday.
Amherst’s report arrives weeks after the Treasury, Federal Housing Finance Agency and the Department of Housing and Urban Development asked industry professionals to submit feedback on ways the government agencies can move distressed properties through REO asset disposition programs.
Some 4,000 proposals were submitted to the FHFA — suggesting investors and others are immensely interested in the issue and want to be heard.
“It is very clear to us that the economic value of the homes involved, and the benefit to the economy, is maximized by bulk auctions to investors (who will then turn them into rental housing),” said Amherst. “The massive housing market overhang is a clear danger to the U.S. economy — it creates significant stress on borrowers, communities, courts and the banking system — and is stifling growth in the broader economy.”
A few weeks ago, Morgan Stanley released a report, saying investors are warm to the idea of acquiring distressed properties in bulk from the government-sponsored enterprises.
Amherst’s report focuses specifically on the supply-demand imbalance that is currently making it difficult for property owners to offload properties. This imbalance has created a systemic shift in the housing market, making it more attractive for investors to eye properties as rentals that can possibly produce yield while improving the overall housing market.
“Selling to investors can absorb this overhang and, at the same time, provide much needed supply to the rental market,” Amherst Securities wrote. “It is clear that the faster the resolution, the faster the housing market can make a meaningful and positive contribution to the U.S. economy.”
The Amherst Securities report is self serving. Investors have been drooling since the first rumors of bulk sales surfaced several years ago. Show me a fair and open bidding process and I will believe something akin to market value less bulk discount will be achieved. Otherwise this will just be another transfer of publically owned assets (wealth) to the Goldman Sachs of the world at deep discounts.
The “economic” (fair market) value will be realized by selling most of the inventory at retail. That’s been working well everywhere there is a market. The unsaleable garbage in the warzones can be dumped onto the cities, the non-profits, or anyone that will step up and offer real money for them.
Agreed, and can you see it coming?
Fannie/Freddie will bundle up all the junkers for bulk discount. The so-called ‘investors’ who have been dreaming of buying a bulk of La Jolla oceanfronts at half-off, turn their nose up at condos in South Central, and then the MSM reports how bad the real estate market is because investors aren’t interested even at steep discounts.