Cash-Paying Vultures Feast on U.S. Housing as Mortgages Dry Up

[Godhumor]

Source: Bloomberg

Delavaco Properties LP plans to spend as much as $30 million this year and $40 million in 2012 to buy bank-owned houses and condominiums in foreclosure-ridden South Florida. The private-equity fund will pay cash.

As lenders tighten mortgage standards and consumers stay on the sidelines amid a five-year slide in home prices, all-cash purchases are surging. The deals are done mostly by investors who can get properties for less than buyers needing loans, fix them up and resell or rent them.

“If there weren’t vultures out there, you’d have a city of dead carcasses,” Robert Theocles, an independent consultant for Fort Lauderdale, Florida-based Delavaco, said in a telephone interview. “It’s like the circle of life.”

A record 33 percent of existing-home sales were made to cash buyers in February, when an annualized 4.88 million properties changed hands, the National Association of Realtors reported March 21. That compares with 15 percent of the 4.82 million annualized sales when the Chicago-based trade group started monthly tracking of such purchases in October 2008.


Read more: http://noir.bloomberg.com/apps/news?pid=20601087&sid=aTXRYALvkbzQ&pos=5

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As I've commented before, cash sales as a % of total is one of the areas people should really look at to judge real estate health. When it starts declining as part of a trend, it will further indicate that people are re-entering the housing market as mortgagees. Right now? Not so much.

[louis-t]

1. It's a double-edged sword.

Getting as many houses off the market as possible is a good thing, but investors owning everything gives me the willies.

[WingDinger]

2. More important is the CIRCLE OF LIFE crack.

Wrote a song about it, and it goes like this.

http://journals.democraticunderground.com/WingDinger/11

[Dokkie]

3. yes you are right

I bet it is worse than bankers owning it instead. Btw one of those investors are people like my brother buying his 1st house for him and his growing family.

[w4rma]

5. If the economy is going to start working again all investors will have to take haircuts. (nt)

[Atypical Liberal]

4. Good.

Look, housing prices are never going to stabilize as long as:

1) There are lots of unsold homes on the market
2) There are lots of distressed properties on the market

It might feel good to be mad at the "vultures" who have the cash to buy homes, but the key thing is that someone is buying them.

[bengalherder]

6. And who are the vultures going to sell it to?

Here boys, have some more poisoned bait.