Thursday, January 26, 2012

I haven't written about real estate in a while.

"WASHINGTON (MarketWatch) — Matt Martin, CEO of Matt Martin Real Estate Management, is eagerly awaiting the introduction of a program that the Obama administration hopes will transform foreclosed properties into rehabilitated rental units and kick-start the economy.

He says he’s not alone. “There is a large chunk of capital, billions of dollars, sitting on the sidelines waiting to see what kind of program the government comes up with,” Martin said.

At issue is a Federal Housing Finance Agency push to develop a program that is expected to use government financing or guarantees to attract investors to buy up big regional or national pools of foreclosed properties currently owned by government seized housing giants Fannie Mae and Freddie Mac. The plan would be to convert these properties into rentals, a market that has strengthened recently. See story from August on foreclosure-to-rental program "

One of the more fascinating developments of the entire recession has been the steady price of rents. As some of you know, I bought my crapshack back in 2008 thinking we were close to flattening out in the housing market. After having it on the market for a couple of months I realised the market had changed much more rapidly than I expected - so I shoved a renter into it.

For the next two years I scoured rentals every week to make sure my rental was competitive with the market. Housing was crumbing so quickly, I was sure rents would also decline somewhat. Meaning if my renter left I would have to reduce the rent for a new tenant.

To my surprise, in those two years, rents only fluctuated a hundred bucks from what I was currently asking.

Skip forward to last year. I noticed rents were rising, but they hadn't been doing so long enough for me to feel it was a real trend. After about a year of the higher rental rates, I decided that maybe it was indeed the new trend. They are now roughly 300 bucks over what I am asking. Which is a relief, because my renter is a bit of a tard. Finally I was more in the drivers seat. If we had a falling out,it would work out better for me.

Then the last month or so, something really strange happened in my region.

You can't find a 3 or 4 bedroom house in my city at all - or any of the burbs surrounding me. The property management companies that once had a page and a half of listings, now only had 7 properties total listed. I mean, there is literally nothing to rent around here. And I notice the rents for a 2 bedroom are starting to approach what I am asking for a three bedroom.

This of course provides me with some comfort. Instead of panicking and just backing out of my crapshack - I made a bet on the future that a lot of people wouldn't be able to buy a house and this would be reflected in rents. I guess I just didn't expect it to be so dramatic.

All of this made me consider going to an auction this week. Not to buy, but to observe. Global events are way too unstable to consider buying anything now. Plus our current administrations which hunt on private investors in the market makes it even less attractive.

This is why when I saw President Money Bags was setting up a program to help his cronies buy houses in chunks at I'm sure a greatly reduced price - sort of pissed me off. And it is quite obvious the only reason these people would be buying these houses is because of the government subsidies. While real normal private investors are sort of screwed. Ya know, the people who would do it with their own money and not government incentives. The higher rental rates are an incentive into themselves.

We don't even know what there is to be bough because of the shadow inventory is hidden from us. Which ironically is that same reason a lot of private investors are not buying right now. That mysterious shadow inventory threatens to make their investments radically less valuable.

It is just frustrating. People will buy those houses - if you just let them. It isn't rocket science.

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