Who Has The Wealth In America? Take Real Estate (Homes)
At the bottom of the page is a 60 Minutes report from Leslie Stahl on the coming Chinese housing bubble. It's scary as hell. People are buying houses and shopping malls as investments... but no one is living in them or shopping at them-- whole empty cities!
A friend of mine has been trying to buy a home in Santa Clarita in L.A. County, a n area that was hard-hit by the foreclosure meltdown. She's put in bids on 7 houses, lately considerably above the asking price, like even tens of thousands of dollars over the asking price. She hasn't gotten one yet! But no one is living in those houses. They're being bought by investors/speculators-- some of which are Chinese investors who are buying them illegally (against Chinese law, not against U.S. law).
Steven Rosenfeld wrote in AlterNet this week that this isn't just something happening in China and Santa Clarita. All over America "real estate speculators, with billions in ready cash, are swooping into hard-hit locales and buying foreclosed and low-end homes with the same vehemence that created the housing market bubble."
They’re hoping to rent these properties to ex-owners or others, but they’re creating distortions that truly worry housing advocates. Banks are flocking to cash buyers, not to people with loans. First-time buyers can’t get in. Rents are skyrocketing. Home values and prices are going up.
...Working people who have played by the rules-- saving money, holding jobs, filling out piles of paperwork to get low-interest federal loans-- or tried to restructure debt to keep their homes-- are being steamrolled...There’s no precedent for corporate takeover of low-end homes on the scale that’s unfolding, a concern voiced by others, including realtors in Southern California where outlier counties are seeing a third or more of foreclosed homes bought with cash.
...There’s an old saying in real estate that you make money when you buy, not when you sell. Waypoint’s investors—like other big investment pools with similar plans—see low-end homes as a giant untapped equity play. Property values in this market dropped by a half or two-thirds in value in cities such as Richmond as the real estate crash bottomed out. Pheonix, Las Vegas, Tampa and other foreclosure centers all had similar price collapses. The sector was poised to rise in value at margins exceeding most stocks and bonds, if home values even recovered a fraction of their former peak.
Investors with hundreds of millions in ready cash, such as the Blackstone Group, Colony Capital, Oaktree Capital Management started buying thousands of homes in the most depressed markets for cash and as-is. Their sales pitch promised returns of 6 to 8 percent from rental income and a longer-term payout of 16 to 18 percent once the properties are sold in a half-dozen years or so, said Paul Staley, who buys, rehabs and sells homes for a Bay Area affordable housing non-profit. The investor's cash meant banks and other mortgage lenders didn’t have to worry about inspections, appraisals, government standards and haggling with buyers. Those market "efficiencies" pushed players like Community Housing Development Corporation of North Richmond and its clients out of the equation.
UPDATE: Bob Ney's Tell All Really Does Tell All!
Bob Ney, an alcoholic mess and patsy who wound up in prison for taking bribes, a sacrificial pig from the House GOP caucus, is out of jail and hawking a new book, Sideswiped: Lessons Learned Courtesy of the Hit Men of Capitol Hill. I haven't read it yet but read about it at the National Journal a few hours ago. Boehner, who has already denounced the revelations about his own criminal activities by Ney by having a spokesperson tell the Beltway media that Ney is "a convicted felon with a history of failing to tell the truth, making a lot of baseless accusations to try and sell books." Boehner appears to be the main villain, although Ney goes after the whole crew of corrupt Republicans running the show when Bush was president. Let me share:
Ney’s most dramatic accusations are against his fellow Ohioan John Boehner, the man he once saw as his biggest rival to someday being speaker. He describes Boehner as “a bit lazy” and “a man who was all about winning and money. He was a chain-smoking, relentless wine drinker who was more interested in the high life-- golf, women, cigarettes, fun, and alcohol.” He said Boehner “spent almost all of his time on fundraising, not policy.” He “golfed, drank constantly, and took the easy way legislatively.” Ney recalled Boehner handing out checks on the House floor and said his ties with a tobacco company were so tight that lawmakers could get free cigarettes from Boehner’s office. His golfing, Ney said, was “nonstop” and “paid for by lobbyists.”In 2008 he voted for President Obama.
Ney wrote: “If the Justice Department were ever to make John produce receipts for his addiction to golf just for the years from 1995 to 2004, he would be hard-pressed to comply. John got away with more than any other Member on the Hill.”
The most inflammatory accusation against Boehner in the book is Ney’s contention that he ended his reelection campaign after winning the primary in 2006 only after Boehner, then the majority leader, summoned the cash-strapped and embattled congressman to his office and told him if he quit the race, Boehner would take care of him. “If you resign the next day, I will personally guarantee you a job comparable to what you are making, and raise legal defense money for you that should bury all this Justice Department problem for you,” Boehner said, according to Ney. He said he pressed Boehner, repeating the terms and getting assurance that the offer was “ironclad.” When Ney called back the next day to accept the deal, he wrote that he again repeated the terms to Boehner, who agreed. “Because of Boehner’s promise, I stepped aside,” he wrote. But Ney said Boehner did not keep his word. “I had been lied to and ditched,” Ney said.