Is the housing recovery for real, or isn’t it? Nick Timiraos takes a crack at this question in a WSJ piece on Three Myths About The Housing Market Rebound. Timiraos suggests the following are not exactly true….
Myth #1: Housing would crumble if the private equity-backed investors stopped buying.
Myth #2: Institutional investors must be overpaying for homes.
Myth #3: There’s a massive shadow inventory of bank-owned homes that will hit the market, scotching any recovery.
While Timiraos’ article is interesting, I find it a little light on qualitative data, and I think he makes some rather optimistic assumptions. I think Timiraos’ logic is particularly flawed in the sense that he assumes the current situation is sustainable. It isn’t! Investors are currently interested in housing because they are flush with cash. My question for Timiraos is what happens when investors aren’t feeling so rich anymore? For context, I will simply leave you with this nice chart of the S&P 500….