Big investors are pouring unprecedented amounts of money into real estate hard hit by the housing crash, bringing those moribund markets back to life but raising the prospect of another Wall Street-fueled bubble that won’t be sustainable. Drawn by the prospect of double-figure profit margins on rents and the resale of homes whose prices plummeted in the crash, hedge funds, Wall Street investors and other institutions are crowding out individual home buyers.
If the chain of easy credit and dangerous leverage that started on Wall Street fanned the housing bubble and eventual crash, some analysts find it disturbing that major investors are the ones snapping up the bargains — and eventual big profits — left in its wake. “There is the possibility that Wall Street and the banks and the affluent 1 percent stand to gain the most from this,” said Jack McCabe, a real estate consultant based in Deerfield Beach, Fla. “Meanwhile, lower-income Americans will lose their opportunity for the American Dream of building wealth through owning a home.”MORE: BLOOMBERG: Goldman Backs Mullen in Rentals After Subprime Short
Donald R. Mullen Jr., who helped Goldman Sachs Group Inc. (GS) profit from the U.S. housing crash, is giving the firm and its clients a way to gain from the recovery.
Mullen, 54, has raised almost $1 billion to buy single- family houses to rent since leaving Goldman Sachs last year as head of global credit and mortgages, five years after overseeing the bank’s bet against the imploding subprime home-loan market.
His Fundamental REO LLC has already purchased or is close to acquiring almost 2,500 properties through foreclosure auctions, government agencies and even an Arizona non-profit that promotes affordable-home ownership, property records show.
Fundamental REO LLC CEO Donald R. Mullen Jr. plans to spend as much as $2 billion by 2016, joining private-equity giants including Blackstone Group LP and Colony Capital LLC seeking to take advantage of home prices 29 percent below the 2006 peak and rising demand for rentals from Americans blocked out of homeownership.
Mullen plans to spend as much as $2 billion by 2016, joining private-equity giants including Blackstone Group LP (BX) and Colony Capital LLC seeking to take advantage of home prices 29 percent below the 2006 peak and rising demand for rentals from Americans blocked out of homeownership.
THE RICH AND CONNECTED ARE DOING FABULOUSLY WELL UNDER OBAMA. THE STOCK MARKET IS BACK - THOUGH PARTICIPATION BY THE GENERAL PUBLIC IS WAY DOWN.
MEANWHILE, THE REST OF US KEEP GETTING SCREWED.
GOLDMAN AND THE LIKE MADE BILLIONS ON THE CRASH - THEY EVEN GOT TIPPED OFF ABOUT IT BY THE SEC TREAS HANK PAULSEN.
NOW, THEY'RE MAKING A FORTUNE SCOOPING UP THE DEBRIS.
SHEESH.
I WONDER WHEN THE FOLKS ON THE LEFT WHO THINK OBAMA SUPPORTS POLICIES TO HELP THE WORKING CLASS WILL WAKE UP?
OBAMA IS A "BREZHNEV SOCIALIST" AND A CHICAGO MACHINE CROOK.
HIS POLICIES HELP CRONIES AND THE MACHINE MORE THAN ANYONE OR ANYTHING ELSE.
THEY WRAP UP THEIR POLICIES IN SOCIALIST JARGON TO FOOL THE MASSES.
BUT THE POLICIES - FROM ECONOMIC TO ENVIRONMENTAL TO BUDGETARY TO HEALTH AND EDUCATION - DO MORE FOR THE SPECIAL INTERESTS THAN THE PEOPLE AT LARGE.
WAKE UP, PEOPLE!
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