Someone asked me why rental home REITs (an investment trust) have soared 14% over the past few months (investors pumped $22 billion into them this year already). It's simple: they're betting on Obama's housing white paper to deter home ownership.
Here's the logic: $269,900 (average U.S. home price) x .20 (required 20% down payment under Obama's new FHA guidelines for "Qualified Residential Mortgages") = $53,980 + $7,500 (average closing cost) = $61,480 (required cash-on-hand to buy a home unless you take private money (which come with astronomical interest rates; you'll pay an additional $200,000 in interest over the life of the loan))... so if you don't already have a home, you'll likely be renting for the next 15 years (time it takes to save $61,480 on average household income)... if you do own a home (it's unlikely to sale for a return on investment, you'll lose your equity with shortage of buyers in a "buyers market," and likely turn upside-down on the mortgage resulting in a REO/Foreclosure and opportunity for the REIT to purchase the property for 30% of its true value and put it on the rental market as well). I hope that makes sense.
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