Personally, I view today's RE investors/speculators more like locusts who move to some virgin territory, run up prices, destroy affordability, and then move on to some new locale without leaving any value behind.
Some choice quotes:
"Randy Bianchi is a firm believer that in America, "a person should be allowed to buy a second, third or fourth home if he or she wants." That goes for real estate investors and speculators, even those who "flip" homes—that is, people who buy a house or condominium for the sole purpose of quickly selling it off for a profit, usually before construction is completed and often without even taking title to it. But Bianchi, a real estate broker and co-owner of Paradise Properties in West Palm Beach, Fla., who says he may soon flip a luxury condo himself, admits that his convictions about the practice are being tested in today's housing-price boom when homes in his area of Florida are jumping 35% a year. "Flipping," says Bianchi, "is turning into a negative phenomenon. In reality, it's pushing the market up too fast.""
"Some of the nation's leading homebuilders call that an understatement. To them, real estate investors, especially flippers, are to the housing boom what day traders were to the disastrous dot.com craze: a scourge distorting the market. In fact, Steve Hilton, co-CEO of Meritage Homes Corporation in Plano, Texas, said in an interview last month with the Arizona Republic in Phoenix—one of the nation's hottest real estate markets—that many investors today are "parasites" who artificially "raise the price of housing" but "don't bring any value." Craig Robins, head of Dacra Developers in Miami, concurs: the investors, he says, are bringing a hyper-short-term mentality to real estate ownership that creates too much turnover and "diminishes both the financial and community integrity of any development.""
"Investors argue they're being unfairly scapegoated. Developers, they say, are simply frightened that outsiders like them are getting a piece of the action for once. They add that homebuilders, far from being the socially conscious lot they've cast themselves as in this dispute, are just as culpable with respect to skyrocketing housing prices."
"What's also at stake, say the developers, is the status of the "home" as something more than a commodity as instantly tradable as pork-belly futures. When the prime purpose of a house or condo becomes hedging instead of living, they argue, it eventually loses the cachet of residential and community stability that keeps property values strong in the long term."
1 comment:
this article waas great. Speculators and investors entering the Las Vegas market drove house prices up over 50% and created a housing shortage in 2004. As a result, people who really wanted to live in houses, like my family, had to pay $100,000 more for a house than it cost 12 weeks earlier. Parasites, locusts, vermin, whatever you want to call them.
They come in run up your communities prices, flood the market later and ultimately cost everyone that ends up living in the community long term in terms of taxes, mortgages and other costs.
They laugh on the way to the bank. But if they lose, like a few cases in LV where specualtors bought 5-15 homes and then could not flip them, they turn around and sue their lender for lending to them or the builder for selling to them.
Personally if every speculator went bankrupt tomorrow I would not cry a tear.
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