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Wall Street Is Drooling Over The Money It Will Make On Americans Who Can’T Afford Houses

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Bad news for American families is great news for the financial industry, according to the real estate finance industry trade magazine CRE Finance World (CREFW).

Workers’ incomes will continue to decline and homeownership will become an ever more remote dream for the typical American, boosting demand for rental housing and pushing the cost of rent up, an article in the magazine’s new edition says. That will cause the market for rental housing securities — complex financial contracts backed by rental properties — to explode over the next year, Deutsche Bank analyst Harris Trifon writes.

Right now, the rental housing securities market mostly consists of a single half-billion dollar deal from late last year. If Trifon is correct, the market will be ten times larger by the end of the year, growing to $5 billion, and will reach $20 billion in the near future.

Given that Trifon’s firm helped arrange the first major rental-backed securities deal last year and that his analysis is being published by a magazine made by and for industry insiders, some skepticism is warranted. But the basis for his analysis looks sound. Working peoples’ incomes are stagnant or even falling, making it harder to afford buying a house. More than a trillion dollars of outstanding student loans are keeping hundreds of thousands of young people from buying homes. These obstacles to homeownership don’t appear to be dissipating anytime soon, so it stands to reason that the demand for rental housing will continue to climb, allowing landlords to raise rents all across the country.

Those projections have real consequences for the tens of millions of Americans who will actually live their lives in these rented homes. More renters will find themselves dealing with faceless corporate landlords who feel more responsible to far-away investors than to their tenants. Wall Street firms have moved aggressively into the landlord business, buying up roughly 200,000 homes to rent in recent years. Almost all of those purchases are in the South (57 percent) and West (33 percent) of the country, according to Trifon’s figures.

But the primary case study for this set up is performing quite well so far from Wall Street’s perspective. As ThinkProgress previously noted, that deal made a New York hedge fund called Blackstone the nation’s single largest landlord and gave the firm the chance to prove to the investment world that its new housing scheme could be a secure source of profit. While total rent collections on the housing units underlying that deal declined significantly from October to January, it is still outperforming analyst expectations in a variety of ways.

Just substitute 'America' for 'Britain' in the article.

It's almost as if the whole 'collapse' was engineered by these rentier banks to hoover up property/assets for pennies on the dollar/pound.

Hoovered up using the very same monies they lent out to the poor buggers who penned their name to the contracts and now assert total control over their lives in every way.

So sad, but beautiful really if you are a senior banking type.

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Read this today, from the 20th Feb 2014

Rental Income Falls 7.6% in Three Months in Blackstone’s First Home Lease Securtization

Posted on February 20, 2014 by Yves Smith

A Blackstone deal in the runup to the financial crisis, its acquisition of Equity Office Properties Trust from Sam Zell in early 2007 was recognized at the time as a sign of a market peak. Is history about to repeat itself with Blackstone’s rental securitization?

continues: http://www.nakedcapitalism.com/2014/02/rental-income-fall-7-6-three-months-blackstones-first-home-lease-securtization.html

other: http://www.bloomberg.com/news/2014-02-19/rents-used-to-pay-leased-home-bonds-fall-7-6-morningstar-says.html

The original site.. ibtimes, which linked to the nakedcapitalism story, seems to be partly down at the moment, but I think they said it's the next release of results, which will be really telling.

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Rotten. 'Investors' with too much cash no longer even need to put up with the running of the property...rent to a serf fund!

So financial security in the form of owning a HOME outright by the time you retire is out the window?

With the continued drive for automation/efficiency/cost savings...how do they expect older people to work in order to pay these rents?

And what if the pensions go boom? Then what?

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It might be the first anti-HPC position I've ever taken, but partly I'm very relaxed about big financial institutions hoovering up these properties.

Rents can soften, and have a bit already. Tenants should be able to demand their rights (whatever they are in USA) for repairs / maintenance / return of deposits / no snooping landlord letting themselves in... and a big corporate should jump, or be ready to get hit with some legal action. Renting is also good in uncertain times where you may have to relocate for next job.

USA wanderlust internal migration is highly associated to changing economy.

When and if they IPO spin them off, let's hope it attracted the "can't go wrong with property" yield chasers, putting their own wealth further at risk.

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This bleak corporatocracy becomes more like 'Half-Life 2 ' the video game everyday. no wonder I feel the need to live in a shipping container for some futile gesture at protection.

Our Benefactors (Wall St / The City etc) say

http://www.youtube.com/watch?v=MbWW1aoJ_Ds

Edited by Saving For a Space Ship

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It might be the first anti-HPC position I've ever taken, but partly I'm very relaxed about big financial institutions hoovering up these properties.

Rents can soften, and have a bit already. Tenants should be able to demand their rights (whatever they are in USA) for repairs / maintenance / return of deposits / no snooping landlord letting themselves in... and a big corporate should jump, or be ready to get hit with some legal action. Renting is also good in uncertain times where you may have to relocate for next job.

USA wanderlust internal migration is highly associated to changing economy.

When and if they IPO spin them off, let's hope it attracted the "can't go wrong with property" yield chasers, putting their own wealth further at risk.

Yep. Profit driven entities that form one of the biggest political lobbying powers in London and Washington. What could possibly go wrong?!

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It might be the first anti-HPC position I've ever taken, but partly I'm very relaxed about big financial institutions hoovering up these properties.

Rents can soften, and have a bit already. Tenants should be able to demand their rights (whatever they are in USA) for repairs / maintenance / return of deposits / no snooping landlord letting themselves in... and a big corporate should jump, or be ready to get hit with some legal action. Renting is also good in uncertain times where you may have to relocate for next job.

Its the way its going I hope, put the amateur buy to letters and reluctant landlords out of business for good. If its done right Im actually in favour, providing the tenancy rights side is addressed. If done right we will rent as long as we like, at our convenience not some landlords, repairs actually carried out with accommodation kept to a good standard… hotel standard. Communal swimming pools, gyms, etc. Who wouldn't want to give a virgin branded hotel-a-like block of apartments a shot for a few months?

It can't be worse than the rash of amateur idiots providing rentals now can it? Id rather be treated like a paying customer.

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It might be the first anti-HPC position I've ever taken, but partly I'm very relaxed about big financial institutions hoovering up these properties.

Rents can soften, and have a bit already. Tenants should be able to demand their rights (whatever they are in USA) for repairs / maintenance / return of deposits / no snooping landlord letting themselves in... and a big corporate should jump, or be ready to get hit with some legal action. Renting is also good in uncertain times where you may have to relocate for next job.

USA wanderlust internal migration is highly associated to changing economy.

When and if they IPO spin them off, let's hope it attracted the "can't go wrong with property" yield chasers, putting their own wealth further at risk.

+1

Blackstone have been hoovering up social housing in Spain (Madrid) but have to retain existing secure tenancies, which is sooo unacceptable to the mom and pop Rachmans. We might see some professionalisation of the sector, some sense of customer service, and just maybe longer term tenancies might also be in the interest of the rentier.

In fact we are starting to see this process in the student rental sector.

Edited by aSecureTenant

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Yep. Profit driven entities that form one of the biggest political lobbying powers in London and Washington. What could possibly go wrong?!

+1

By the time they've got round to slicing and dicing them like the mortgage backed securities, tranched this and tranched that, offloaded risk here there and everywhere and then lost trace of who is responsible for whatever it seems quite likely to be another form of financial "vehicle" going to end in disaster and for involved renters as well.

It's the financial sector fraudsters and crooks/crocks people will likely be dealing with and their well known ability to make a hash of things at everyone else's expense. They'll find a way.

Edited by billybong

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Working peoples' incomes are stagnant or even falling, making it harder to afford buying a house. More than a trillion dollars of outstanding student loans are keeping hundreds of thousands of young people from buying homes. These obstacles to homeownership don't appear to be dissipating anytime soon, so it stands to reason that the demand for rental housing will continue to climb, allowing landlords to raise rents all across the country.

How do the maths on the yield work then?

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It might be the first anti-HPC position I've ever taken, but partly I'm very relaxed about big financial institutions hoovering up these properties.

Me too. It's not like the big financials ever lobby government to get the rules and regulations that suit them best. Let's face it - ASTs are a bit generous towards the tenants, and why should landlords be responsible for the upkeep of their properties when they're not the ones living there? :rolleyes:

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Company selling securities explains why securities are about to boom. Yeah right, big story. Investors having got badly burned just a few years ago are going to be a bit suspicious, so let's appeal to their greed and see if we can kick-start this thing. Using a bit of the logical fallacy about houses disappearing altogether because someone doesn't buy them at full asking price ...

Meanwhile in the real world there are good examples of markets where renting is normal.

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So the Corporate Oligarchs already, own and control the supply chain for most of the necessities of life. Supermarkets / food, energy, water, online mkt places (Az / ebay) , Finance / credit... increasingly even pound shops.

While the debate over small & large landlords probably deserves another thread, some hpc'ers hoping for control over corps to treat rental tenants fairly, should read the linked story below.

I wonder why commercial lease rent reviews can only go up and not down ?

http://www.globalresearch.ca/free-trade-agreements-the-bypassing-of-democracy-to-institute-economic-plunder/5354197

The EU is currently negotiating a far-reaching free trade agreement with the US, the Transatlantic Trade and Investment Partnership (TTIP). There are plans to enshrine extra powers for corporations in the deal as a result of a strong and persistent campaign by industry lobby groups and unscrupulous law firms to allow powerful corporations to challenge regulations both at home and abroad if they affect profits.

The watchdog organization Corporate Europe Observatory (CEO) states that EU member states could find domestic laws to protect the public interest quite useless as they become challenged in secretive, offshore tribunals where national laws have no weight and politicians no powers to intervene.

It would enable US companies investing in Europe to bypass European courts and challenge EU governments at international tribunals whenever they find that laws in the area of public health, environmental or social protection interfere with their profits. EU companies investing abroad would have the same privilege in the US. This proposed agreement (and others like it around the world) is essentially a charter for the systematic destruction and dismantling of legislation that exists to protect the hard won rights of workers and ordinary people.

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