Positive housing reports hide true conditions
Investors play giant role in industry recovery
Reports continue to suggest that the housing market is improving. Housing starts are up, foreclosures are dipping and home purchases are rising. So what could be wrong? Rick Aneshansel, president of U.S. Bank Home Mortgage, posed a version of this question. Per the Star Tribune:
What’s wrong is that purchases of homes by investors account for an estimated 30% of U.S. home sales, Aneshansel said. Goldman Sachs analysts go further, estimating that more than half of home purchases in 2012 and 2013 were made with cash, “driven by the significant role that investors are playing.”
This will eventually stop, as hedge funds find something else to do with their money. Then the U.S. housing market will look different.