[quote=outtamojo]I am starting to wonder now, how much inventory is held by samll time investor groups along with big time hedge funds. I hope it is not a lot, because hedge funds have a tendency to piss and poop on everybody else.[/quote]

I think there is a lot. DQNews said 28% of the houses are bought by absentee buyers in SoCal. Keefe, Bruyette & Woods, an investment bank, estimates that around $6-8 billion is being lined up to invest in single-family homes, the most appealing part of the market. Blackstone is said to be buying some 100 houses a day in selected markets. Normal home owners are the ones with FHA/conventional loans. They cannot compete with hedge funds with REIT to refinance what they just purchased using debt. You cannot beat Blackstone with your credit rating and they are leveraging using loans to improve yields.

Rick Sharga from Carrington recently said: there are three different sources for properties that you can purchase. There is new home development of which there has been virtually none of over the last five years. There is existing home sales, which are limited since between 1/4 and 1/3 of all homeowners who are upside-down do not or cannot sell their property. There are also distressed properties, which are technically existing homes that are put into a different bucket. All three of these things are lower than normal, and there is a limited amount of inventory available. At this precise moment in time Wall Street came in and gave $8 billion to spend on REO properties. Imagine what would that do to the price and that’s exactly what happened. Common men are screwed.

The good comfort is that they may not dump all their rental all at once, because they need the cash flow for the business structure to work so they can only sell a portion of their properties at a time in the future. But it’s not all the evil hedge funds at work, they, like the rest of us, are driven by yield and Ben Bernanke doesn’t give them any other options.