Investor demand, large and small, put a floor on home prices after the housing crash and ignited a recovery. While institutional investors made up a small percentage of those home buyers, they have garnered the most attention because of the bulk purchases they made and because they are a new entrant to the housing market. The concern now is what will happen if and when they decide to pull out? Here is a direct video link.
What about all those regular folks looking for a place to call home that traditionally have provided organic demand for housing?… Well as we mentioned earlier here, stagnant incomes, crippling debt and rising rates have prompted mortgage applications to flat-line over the past 4 years to 1995 levels before the credit bubble began. So thanks to the Hedge Fund speculators and “QE liquidity” for driving prices up double digit in many housing markets over the past couple of years. But then again higher prices only mean even fewer people can afford the rents today never mind the mortgage payments needed to take those houses off the Hedgies…holding unrewarding “investments” is unlikely to be a popular strategy for long.
Chart source: Bloomberg via zerohedge