But, compared to other times, there was less leverage being used during this time in the housing market. The only reason there wasn’t a bubble in housing at that time was because of the huge deleveraging that was occurring at the same time. The money being pulled out of the housing market at that time offset the money going in…but only briefly. We quickly shot back up to fairly crazy levels (and I respectfully note that some would disagree with me on this).
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I don’t quite understand… who was pulling the money out of the housing market, when the investors money was going in?
[quote=CA renter]
We can’t look to price/rent ratios during this time because the rental market has been affected by this speculation as well — more rental demand because people can’t compete with the investors, and the investors controlling rents in many markets because they (recent/large/institutional investors and speculators) control a significant portion of the rental inventory in many areas.[/quote]
IMO the rental demand was high during this time due to foreclosures or folks walking away from their homes, and not necessarily because people could not compete with the investors. Majority of the renters were not looking to buy a home, and those who desired had bankruptcy/foreclosure in their credit to get a loan.[/quote]
The money going out of the housing market was the debt destruction as people were being foreclosed on. Creditors/mortgage lenders were pulling out of the mortgage/housing market.
Yes, the foreclosed homedebtors contributed significantly to the increased rental demand…which is one of the reasons why non-traditional housing investors were rushing into the rental market.
But a lot of potential buyers from this time period were complaining bitterly about having to compete with “all cash” investors from around the globe. That’s why there were so many cash sales.
