Housing Price Index Shows First Year-Over-Year Increase in 21 Months

By: Tuesday August 28, 2012 11:45 am

The housing recovery narrative got a boost today from the Case-Shiller price index, which went positive year-over-year for the first time since a first-time homebuyer’s tax credit goosed the numbers in 2010. So really, this is the first year-over-year increase since the housing bubble collapsed in 2007 2006. And the usual suspects are ecstatic, but there are still troubling signs the market is not yet healthy.

The Worst Idea in the World: Securitizing Rental Revenue

By: Sunday August 26, 2012 1:00 pm

The last financial crisis can be blamed in large part on runaway securitization. Wall Street giants sliced and diced mortgage loans into bonds that they sold around the world. They claimed that they diversified the mortgage pools so that even a few defaults would not undermine the value of the securities, and they offered tranches of the bonds at a decent yield. As global demand increased for the securities, Wall Street pressured originators to close more and more loans, regardless of creditworthiness. This caused a bubble in prices. Moreover, financial innovators took the lower-tranche loans and cut them up into once-removed securities, making bets on bets on the housing market that were allegedly “safe”. We all know how this ended, and how the securitization bubble took a crash in housing prices and made it exponentially worse.

So now we’re poised to do that all over again.

Housing Recovery Narrative Surges Forward, But Reasons for Price Rise More Sinister

By: Wednesday August 8, 2012 8:45 am

The “housing is back” narrative got another boost with a story in the Wall Street Journal that simultaneously makes an unequivocal statement about home prices, and then acknowledges wild variance in the data set.

Securitization, Take II: Investment Firms Seek to Securitize Rental Payments

By: Saturday July 21, 2012 10:15 am

Though this proposal to use eminent domain to buy up underwater homes and refinance them has been getting a lot of publicity in intellectual circles, the unorthodox fix for the housing market is already happening. That would be the REO-to-rental revolution, where investment firms buy up foreclosed properties in mass quantities after repossession, and flip them into the rental market. Entire firms are being built with this business model. We know that over 40% of the city of Oakland’s foreclosed homes have been purchased by investors. This isn’t prospective, it’s already happening.

The Great Housing Swindle: Shadow REO Artificially Boosting Prices

By: Monday July 16, 2012 9:40 am

With more claims the housing market has hit bottom, there are growing indications that this is all based on a convenient fiction around artificially reduced supply. A little-noticed item at AOL Real Estate, based on the same industry data banks and analysts use to tout a recovery, introduce us to the scam in “shadow REO” — inventory deliberately held off the market to hide loses and artificially jack up prices.

The Great Investor Purchase of Foreclosed Properties

By: Monday July 2, 2012 7:15 pm

So the “stability” in the housing market comes from a new class of investor landlords buying up masses of properties on the cheap – one example in the piece shows a foreclosed borrower willing to pay $300,000 for a house than an investor took for $150,000 – and converting them into either rental units or development. I think this is really not a welcome scenario, no matter how it ameliorates the housing slump.

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