San Diego Housing Market News and Analysis
RE shadow inventory???
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Submitted by phaster on June 3, 2017 - 8:45am
had an interesting RE conversation last week and thought I'd ask if anyone has heard this...
basically from what I gathered stuff like RE “shadow inventory” was placed into something called "special purpose entities" (SPEs)
the magnitude of toxic stuff which is “off balance sheet” at the national level is unknown because its juggled kinda like overnight commercial paper
since SPEs are traded and not “held” for very long, the property is not recorded at county recorders office level (thus RE turns into “shadow inventory”)???
I'm guessing this same idea is playing out in the international markets (in other words markets like china), where their central banks have set up a similar liquidity trap (in an effort to boost their own domestic economy)
so money flows into RE which acts as a store of value BUT everyone sees how overpriced their own market is AND reason the grass is always greener someplace else.... So rich people from china buy real estate as a hedge in the USA, then rich people in the USA buy real estate in Mexico as a hedge, etc., etc., etc.
bottom line w/ global markets and money knowing no borders, there are still lots of unknown risks (knock on effects) from “shadow inventory,” derivatives, swaps, mismanaged stuff like pensions
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