HOUSING: Feds suspend anti-flipping rule

[CA renter]

[quote=AN]Yes, price would still bubble if we still have neg am, no doc, io,etc loans. We heard plenty of stories of people who make $50k a year buying million dollar houses.

Let’s put this another way, even if there are 10x more flippers, if rates are high, lending standard is tight, I don’t think the bubble would form.[/quote]

If there were 10X more flippers, that would mean 10X the existing demand from flippers. Buyers (demand) are always competing against the pool of other buyers at any given point in time. If you increase the demand for a given commodity at a specific point in time, the price of that object will rise to the level that the most foolish or richest person is willing to pay (leverage/cheap money plays an exceedinly important role here, too). It’s all about the competitive “bidding wars” when resources are tight, and supply is constrained.

Loose lending increases prices because it introduces additional demand (other buyers who would not qualify to buy under “normal” circumstances). Speculation, by its very nature also increases demand as people buy (multiple) homes that they never intend to occupy as a primary residence. They create a false demand/constrained supply ratio **at a specific point in time** that affects prices and the behavior of other buyers (both speculators and organic buyers).

People were willing to take on debt they couldn’t afford because they were competing with other buyers. At the peak of the mania, speculators comprised over 40% of the market. They sucked up all the inventory and reintroduced it at much higher listing prices. The buyers at the time felt they had to use toxic mortgages because they believed those list/sales prices were “real” (caused by organic buyers), when they were really caused by the (temporary) increased demand of speculators.

Again, the easy money facilitated the speculation and the speculation facilitated the easy money because the lenders could show the loans were well collateralized, and there were few/no loan losses during the mania — they could convince bondholders that these mortgages were “safe”. You cannot think of speculation and easy money separately; they are closely linked.

BTW, right now, we are right back to easy money, high leverage, and intense speculation.
My bet is that speculators once again comprise about 40% of the market or greater, especially when one considers all the deals that are being done off the open market, like bulk sales and MBS investments that we are not privy to. They are setting up the next collapse, IMHO.

[an]

[quote=patb]flippers take out of the market fixers.

cosmetically ugly propeties that an owner
can fix up over a decade.[/quote]
I totally agree with this statement. They remove cosmetic fixer from the market and add decent move in ready homes.

[an]

[quote=patb]flippers take out of the market fixers.

cosmetically ugly propeties that an owner
can fix up over a decade.[/quote]
I totally agree with this statement. They remove cosmetic fixer from the market and add decent move in ready homes.

[an]

[quote=patb]flippers take out of the market fixers.

cosmetically ugly propeties that an owner
can fix up over a decade.[/quote]
I totally agree with this statement. They remove cosmetic fixer from the market and add decent move in ready homes.

[an]

[quote=patb]flippers take out of the market fixers.

cosmetically ugly propeties that an owner
can fix up over a decade.[/quote]
I totally agree with this statement. They remove cosmetic fixer from the market and add decent move in ready homes.

[an]

[quote=patb]flippers take out of the market fixers.

cosmetically ugly propeties that an owner
can fix up over a decade.[/quote]
I totally agree with this statement. They remove cosmetic fixer from the market and add decent move in ready homes.

[an]

Yes, 10x more flippers = 10x the existing demand from flippers but it would also = 10x the existing supply from the flippers too. Flippers do not buy houses and destroy them. They either fix it up or just put it right back on the market.

You forget that loose lending also allow people who shouldn’t be buying houses at all to buy. Those are demand that wouldn’t have existed. Renters buying starter houses, people who would have bought starter houses buy move up houses, etc. It just add a lot more demand out there. Supply is fixed except for new construction. Once again, I don’t see flipper removing supply, they just change the type of supply but the house doesn’t go anywhere.

Of course speculation and easy money are linked, but I say easy money allow people to speculate, not the other way around. So, the root cause is not speculation, the root cause is easy money. This all comes back to your statement:

[quote=CA renter]
Though some of us think flipping is a big part of the problem, it doesn’t mean we’re not informed.[/quote]

You can’t lay food in front of hungry people and tell them they can’t eat. Human are greedy creature. It’s just the way it is. That’s why communism doesn’t work even though it’s perfect idealistically. Flipping doesn’t cause the bubble, easy money did. You just said so yourself, easy money is now starting again and you’re expecting speculators to increase. Which mean speculation was there when easy money wasn’t there.

[an]

Yes, 10x more flippers = 10x the existing demand from flippers but it would also = 10x the existing supply from the flippers too. Flippers do not buy houses and destroy them. They either fix it up or just put it right back on the market.

You forget that loose lending also allow people who shouldn’t be buying houses at all to buy. Those are demand that wouldn’t have existed. Renters buying starter houses, people who would have bought starter houses buy move up houses, etc. It just add a lot more demand out there. Supply is fixed except for new construction. Once again, I don’t see flipper removing supply, they just change the type of supply but the house doesn’t go anywhere.

Of course speculation and easy money are linked, but I say easy money allow people to speculate, not the other way around. So, the root cause is not speculation, the root cause is easy money. This all comes back to your statement:

[quote=CA renter]
Though some of us think flipping is a big part of the problem, it doesn’t mean we’re not informed.[/quote]

You can’t lay food in front of hungry people and tell them they can’t eat. Human are greedy creature. It’s just the way it is. That’s why communism doesn’t work even though it’s perfect idealistically. Flipping doesn’t cause the bubble, easy money did. You just said so yourself, easy money is now starting again and you’re expecting speculators to increase. Which mean speculation was there when easy money wasn’t there.

[an]

Yes, 10x more flippers = 10x the existing demand from flippers but it would also = 10x the existing supply from the flippers too. Flippers do not buy houses and destroy them. They either fix it up or just put it right back on the market.

You forget that loose lending also allow people who shouldn’t be buying houses at all to buy. Those are demand that wouldn’t have existed. Renters buying starter houses, people who would have bought starter houses buy move up houses, etc. It just add a lot more demand out there. Supply is fixed except for new construction. Once again, I don’t see flipper removing supply, they just change the type of supply but the house doesn’t go anywhere.

Of course speculation and easy money are linked, but I say easy money allow people to speculate, not the other way around. So, the root cause is not speculation, the root cause is easy money. This all comes back to your statement:

[quote=CA renter]
Though some of us think flipping is a big part of the problem, it doesn’t mean we’re not informed.[/quote]

You can’t lay food in front of hungry people and tell them they can’t eat. Human are greedy creature. It’s just the way it is. That’s why communism doesn’t work even though it’s perfect idealistically. Flipping doesn’t cause the bubble, easy money did. You just said so yourself, easy money is now starting again and you’re expecting speculators to increase. Which mean speculation was there when easy money wasn’t there.

[an]

Yes, 10x more flippers = 10x the existing demand from flippers but it would also = 10x the existing supply from the flippers too. Flippers do not buy houses and destroy them. They either fix it up or just put it right back on the market.

You forget that loose lending also allow people who shouldn’t be buying houses at all to buy. Those are demand that wouldn’t have existed. Renters buying starter houses, people who would have bought starter houses buy move up houses, etc. It just add a lot more demand out there. Supply is fixed except for new construction. Once again, I don’t see flipper removing supply, they just change the type of supply but the house doesn’t go anywhere.

Of course speculation and easy money are linked, but I say easy money allow people to speculate, not the other way around. So, the root cause is not speculation, the root cause is easy money. This all comes back to your statement:

[quote=CA renter]
Though some of us think flipping is a big part of the problem, it doesn’t mean we’re not informed.[/quote]

You can’t lay food in front of hungry people and tell them they can’t eat. Human are greedy creature. It’s just the way it is. That’s why communism doesn’t work even though it’s perfect idealistically. Flipping doesn’t cause the bubble, easy money did. You just said so yourself, easy money is now starting again and you’re expecting speculators to increase. Which mean speculation was there when easy money wasn’t there.

[an]

Yes, 10x more flippers = 10x the existing demand from flippers but it would also = 10x the existing supply from the flippers too. Flippers do not buy houses and destroy them. They either fix it up or just put it right back on the market.

You forget that loose lending also allow people who shouldn’t be buying houses at all to buy. Those are demand that wouldn’t have existed. Renters buying starter houses, people who would have bought starter houses buy move up houses, etc. It just add a lot more demand out there. Supply is fixed except for new construction. Once again, I don’t see flipper removing supply, they just change the type of supply but the house doesn’t go anywhere.

Of course speculation and easy money are linked, but I say easy money allow people to speculate, not the other way around. So, the root cause is not speculation, the root cause is easy money. This all comes back to your statement:

[quote=CA renter]
Though some of us think flipping is a big part of the problem, it doesn’t mean we’re not informed.[/quote]

You can’t lay food in front of hungry people and tell them they can’t eat. Human are greedy creature. It’s just the way it is. That’s why communism doesn’t work even though it’s perfect idealistically. Flipping doesn’t cause the bubble, easy money did. You just said so yourself, easy money is now starting again and you’re expecting speculators to increase. Which mean speculation was there when easy money wasn’t there.

[CA renter]

For some reason, it seems I’m not able to communicate what I’m trying to communicate.

Once more, flippers/speculators do not always put their flips/investments on the market immediately after buying them (zero days). If there were no time lags, you’d have a point. You’re neglecting the time lags (marketing, fixing up, escrow, intentionally holding things off the market if the market slows, etc.). Three months can make a big difference in the housing market, and it influences the behavior of all other buyers.

Housing is not a liquid market, and if the number of new flippers/speculators overwhelms the new supply, they become the market — temporarily (weeks, months, years) pushing prices up until they collectively release the inventory onto the market.

If one flipper is selling while two more are buying, and this activity continues over a period of time, speculators are absolutely going to affect the supply/demand ratios and greatly affect pricing. Additionally, it’s very common to see flippers selling to other flippers/speculators. You can have a “false” supply/demand ratio in the market for a long, long time. I don’t know how else to explain it.

[CA renter]

For some reason, it seems I’m not able to communicate what I’m trying to communicate.

Once more, flippers/speculators do not always put their flips/investments on the market immediately after buying them (zero days). If there were no time lags, you’d have a point. You’re neglecting the time lags (marketing, fixing up, escrow, intentionally holding things off the market if the market slows, etc.). Three months can make a big difference in the housing market, and it influences the behavior of all other buyers.

Housing is not a liquid market, and if the number of new flippers/speculators overwhelms the new supply, they become the market — temporarily (weeks, months, years) pushing prices up until they collectively release the inventory onto the market.

If one flipper is selling while two more are buying, and this activity continues over a period of time, speculators are absolutely going to affect the supply/demand ratios and greatly affect pricing. Additionally, it’s very common to see flippers selling to other flippers/speculators. You can have a “false” supply/demand ratio in the market for a long, long time. I don’t know how else to explain it.

[CA renter]

For some reason, it seems I’m not able to communicate what I’m trying to communicate.

Once more, flippers/speculators do not always put their flips/investments on the market immediately after buying them (zero days). If there were no time lags, you’d have a point. You’re neglecting the time lags (marketing, fixing up, escrow, intentionally holding things off the market if the market slows, etc.). Three months can make a big difference in the housing market, and it influences the behavior of all other buyers.

Housing is not a liquid market, and if the number of new flippers/speculators overwhelms the new supply, they become the market — temporarily (weeks, months, years) pushing prices up until they collectively release the inventory onto the market.

If one flipper is selling while two more are buying, and this activity continues over a period of time, speculators are absolutely going to affect the supply/demand ratios and greatly affect pricing. Additionally, it’s very common to see flippers selling to other flippers/speculators. You can have a “false” supply/demand ratio in the market for a long, long time. I don’t know how else to explain it.

[CA renter]

For some reason, it seems I’m not able to communicate what I’m trying to communicate.

Once more, flippers/speculators do not always put their flips/investments on the market immediately after buying them (zero days). If there were no time lags, you’d have a point. You’re neglecting the time lags (marketing, fixing up, escrow, intentionally holding things off the market if the market slows, etc.). Three months can make a big difference in the housing market, and it influences the behavior of all other buyers.

Housing is not a liquid market, and if the number of new flippers/speculators overwhelms the new supply, they become the market — temporarily (weeks, months, years) pushing prices up until they collectively release the inventory onto the market.

If one flipper is selling while two more are buying, and this activity continues over a period of time, speculators are absolutely going to affect the supply/demand ratios and greatly affect pricing. Additionally, it’s very common to see flippers selling to other flippers/speculators. You can have a “false” supply/demand ratio in the market for a long, long time. I don’t know how else to explain it.

[Author]

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