Wall Street betting billions on single-family homes in distressed markets

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“Wharton said his company is riding a lucrative wave. It is able to scoop up many homes for $60,000 or $70,000, which is just a fraction of the building costs. After making repairs, the company rents them out for as much as $1,700 a month. The firm’s biggest client is the federal Section 8 program, which subsidizes the rents of low-income tenants. Delavaco notes that Section 8 provides “over 60 percent” of the firm’s revenue.”

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Wall Street betting billions on single-family homes in distressed markets

MIAMI — Big investors are pouring unprecedented amounts of money into real estate hard hit by the housing crash, bringing those moribund markets back to life but raising the prospect of another Wall Street-fueled bubble that won’t be sustainable.

Drawn by the prospect of double-figure profit margins on rents and the resale of homes whose prices plummeted in the crash, hedge funds, Wall Street investors and other institutions are crowding out individual home buyers.

If the chain of easy credit and dangerous leverage that started on Wall Street fanned the housing bubble and eventual crash, some analysts find it disturbing that major investors are the ones snapping up the bargains — and eventual big profits — left in its wake.

“There is the possibility that Wall Street and the banks and the affluent 1 percent stand to gain the most from this,” said Jack McCabe, a real estate consultant based in Deerfield Beach, Fla. “Meanwhile, lower-income Americans will lose their opportunity for the American Dream of building wealth through owning a home.”

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One Response to “Wall Street betting billions on single-family homes in distressed markets”
  1. Sarah says:

    The “American Dream” is going the way of the dodo. Wall Street is racing to the bottom, calculating that being a slumlord in a big way will make ’em rich. “the banks and the affluent 1 percent stand to gain the most from this” Wow, ya think?

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