If Flippers Rule, Why Is Bloomberg Already Blaming REI for the Next Housing Market Crash?
Thursday, January 22nd, 2009Bloomberg had some interesting news about real estate investors earlier this month. “As the U.S. housing recession enters its fourth year, there’s no sign of a recovery because speculators account for most of the rise in sales.”
What is Recovery?
This got me thinking: How do they define recovery? In terms of the housing market, how will recovery ultimately be measured? Price stabilization? Fewer foreclosures? More accessible home loans? More reasonable terms? Housing Inventories that don’t match the number burgers served by McDonalds?
Though some of us may look great in tights and a cape — members of or proud and independent profession are ill-equipped to go back in time and undo the havoc that has been unleashed on or economy by unbridled Wall Street greed and Main Street folly, but at least we’re doing or part to clean up the mess.
According to a National Association of Realtors (NAR) report released at the end of 2008, there were 4.2 million homes on the market in November, falling from a record peak of 4.6 million in July. What does Bloomberg call that? A death rattle?
The REI Light at the End of the Tunnel
Most signs of recovery seem to relate back to confidence in the market. If real estate investors are out there in the trenches, securing financing and taking chances on houses that the mainstream has written off as blight, aren’t we leaders on the road to recovery?
According to the FDIC, half of all U.S. purchases in November were foreclosures, and at the end of Q3, banks owned a record $11.5 billion of repossessed homes. What do these data tell us?
Can Our Efforts Turn the Tide?
While much of the nation is sitting on the couch, watching the news and wondering why their credit cards suddenly stopped working, and lenders continue panhandling Congress for their next financial bottle of Night Train, we’re out there in droves,sweating real bullets, replacing miles of copper wire that’s been gutted from abandoned (bank-owned) properties, finding homes for abandoned pets, painting, landscaping and committing other wanton acts of rehabbiness.
These efforts aren’t just entrepreneurial wizardry, they’re American in spirit. And it’s going to take a lot more of where that came from in every every economic sector to get this train back on the tracks.
If We Can’t Spur Recovery, How Can We Trigger the Next Crash?!
While the media may be slightly more reluctant than banks to give credit where it is due heading into 2009 with a fresh, new federal administration, this Bloomberg article does raise an interesting point about our mighty force in the rapidly evolving housing market.
Robert Shiller, father of the popular Case-Shiller real estate price index and current Yale University professor told Bloomberg: “You don’t have [the market] in strong hands, you have flippers. These speculators are preventing the market from crashing now, and when they get out, it could fall again.”
Is it just me, or is it ironic that the same article that prematurely credits us for the next crash gives us none when it comes to setting the recovery wheels in motion? Read the article for yourself and let me know what you think.
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