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The Stunning History Of "All Cash" Home Purchases In The US
invite response
2014 Mar 21, 6:51am 1,269 views 3 comments
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2
exfatguy
2014 Mar 21, 9:54am
Every time someone hits the state or IPO lottery, or is born Chinese, another cash buyer is added to the rolls, and those cash buyers don't just buy one house, they buy many.
In other words, there is enough there to sustain rising home prices in perpetuity.
3
fedwatcher
2014 Mar 24, 12:29pm
With rents rising in some areas and a lack of low risk yields, buying for cash can make sense.
I live in the house I bought for cash. I did not buy it to rent out.
http://www.zerohedge.com/news/2014-03-21/stunning-history-all-cash-home-purchases-us
...Finally, due to the very thin marginal source of bidside interest (flipper flipping to flipper and so on), it means that most of America has not participated in this mirage "recovery", and all it will take to send the buoyant housing market crashing is for the one marginal buyer to become a seller. What they will next find, is that when dealing with a bidside orderbook that has zero depth, one indeed takes the escalator down from where the lofty heights achieved courtesy of Fed-funded stairs.
* * *
What is the implication of all the above? Simple: anyone hoping that bank profitability will surge on a steepening of the yield curve due to the imputed positive impact to Net Interest Margin will be disappointed for the simple reason that Americans increasingly refuse to borrow, either due to affordability of availability of credit constraints, and thus the borrow credit cheap, lend expensive arb trade for the banks will simply not work. Incidentally we wrote this in August of last year - since then banks have fired tens, if not hundreds of thousands of mortgage originators having arrived at precisely the same conclusion.
#housing