Good post, CAR. I think you have some valid points:
1. This is definitely an investor driven recovery so far. However, I think behind the investor driven surface, we now have a “shadow demand” from VA/FHA buyers who cannot win any bid.
2. I do think the strong SFH rental market is driven by people who had foreclosure or shortsale. I heard that the SFH rental is getting pretty weak in Murrieta where the peak of foreclosure/shortsale wave is behind us. If you have it in the employment center such as MM, then the demand is more sustainable.
The question is however whether it will be a virtuous cycle going forward or at near future, it will crash again. I don’t see any evidence of the latter yet. Just because investors bought these homes, doesn’t mean it will crash. They are better than the deadbeats some years ago. Which is better? “True end consumer demand” from people with liar loans? Or the current demand from investors who have cash reserve to handle adverse scenario? And if employment will recover, then the investors would as a whole made some pretty smart move.
All the talks of austerity are just talks. The central banks everywhere are busy deflating their currency. Real estate as an asset class has its attractiveness precisely because of that…unless you believe those in power will suddenly decide to have fiscal/monetary disciplines onto themselves.
