Hedge Funds are not just spiking the real estate boom by buying up suburban and rural houses, they are buying up public companies on Wall Street as well! Since January, 2021, buyers have announced nearly 6300 intents to purchase stock exchange listed companies with a value of $1.2 Trillion. And like the housing market all cash buys, many deals with public companies are also all cash. Why? Because cash is likely to see significant devaluation in the near future.
As the saying goes, “Cash is King” in a recession market. While we are not currently in one, the anticipation is based on an unprecedented near future global contraction. Levy your cash now – not when it is worthless.
Since 1913 when the private Federal Reserve was initiated, the value of the US dollar has lost 96% of its purchasing power. One dollar today would be worth 4 cents in 1913. As a business Institution, the Federal Reserve is on par with Lehman Brothers. Bankruptcy is just 4 cents away…
Who could possibly be pushing the $1-2+ trillion infrastructure package? The Federal Reserve. Printing more money causes monetary inflation. The Infrastructure bill has nothing to do with infrastructure. It is simply a pool of dung that will be used to ultimately close the 4 cent gap to $0.
The top three Institutional Investors; State Street, Vanguard and Blackrock, all have virtually the exact same portfolio positions. All have seen some divesting since December 2020 across all shares. With a dash of exceptions, commodities are flat to negative as well.
The places that Institutional Investors seem to prefer for their housing spree include: Lincoln county and George county Mississippi where 50-62% of homes were sold to institutions, 33% cash. Other hot spots include Arizona, Georgia, Nevada and North Carolina.
By contrast, New York City vacancy rate for office spaces has hit an all time high at over 16% with REIT’s getting battered as a result. Although DeBlasio stated that the city would be fully open as of June, that position would seem to come with a new caveat as unvaccinated individuals are eschewed from all privileges of freedom. Oddly, it would seem lost on these establishments that 75%-85% of CoVid cases are among the vaccinated thereby essentially requiring businesses to act as ‘super-spreaders’!
The housing market in NYC had been spiraling for 3 years before CoVid, escalating rapidly with severe lockdown measures and massive crime implosion. Today their market is stabilizing, but only for the relatively inexpensive units whose median price is $370,000, well below Colorado’s new median of $500,000, and certainly well below anything remotely in Manhattan.
New York City’s crime rates for grand larceny have increased by 66% as of April 2021, and 36% for assaults. Obviously, these factors parlay the value of a neighborhood and affect individual home buying preferences.
But it isn’t necessarily the buy and sell mentality that is pushing the real estate market so much as the rental repercussions of an out of reach buyer excursion. Most of the homes bought by these institutional investors are bought with cash at a premium so as to assure locking out other potential buyers.
With lumber prices beyond reach, new home builders are barely scraping trying desperately to pass on the inflationary costs further increasing prices. Appliances can take 4 months, lumber was up 40% or more causing home builder and buyer remorse and sometimes squeezing out buyers altogether. Areas with less expensive housing, like Mississippi, could not afford new housing at all creating a massive shortage. Lifting the rent moratorium also creates havoc given most renters were wholly in the dark about what it meant. While protecting against eviction, the moratorium did not mean rent would not accumulate for nonpayment. Landlords now have the ability to catchup on back rent replete with fees and interest accrued.
Adding to the fray, states are only just beginning to unravel the unemployment fraud that has accumulated since the advent of the federal subsidy. The fraud just beginning to be exposed in Oklahoma is estimated to be over half a billion! While the fraud is likely rampant in every single state, garnishing wages would be the only means to recoup – sending millions more people into dire poverty.
The cycle was well planned. Poverty was the goal. With rents now controlled by institutions, many renters will find themselves sharing flats. Of course, the fact that this was the Agenda of the New Green Deal, it should not be anything but expected.