Is California facing a 'FALSE' sense of housing recovery?

As the year 2012 is drawing to a close, there is alot of discussion among home buyers, home sellers, real estate professionals, mortgage advisors, financial advisors and the public about where the real estate market is headed. 

 

Obviously, I cannot predict the future, just present my observations and thoughts about the low housing inventory in the Sacramento, California and surrounding areas.   Based on my communication with other real estate professionals across the country, I'm confident that what I am presenting here is a nationwide concern.  Home buyers are facing bidding wars, sellers are uncertain they are netting top dollar and the public is believing the inflated predictions from the news media that the real estate market is dramatically improving. 

 

As most of you are well aware, the low inventory for home buyers has not been in the forefront of the news because it is obvious, we all have been distracted with media inundating us with the presidential elections and international affairs. 

 

At the end of 2011, the federal government proposed to rapidly and dramatically reduce the supply of newly foreclosed homes coming onto the market from Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) through the bulk sale of foreclosed homes to Wall Street Investors.  Here it is, nearing the close of 2012 and I know my fellow bank owned (foreclosed home) listing Realtors' inventory completely dried up this year so one can only imagine that federal government actually implemented their own proposal....

 

So what does "bulk sale of foreclosed homes" mean?  The federal government proposed selling aggregates of hundreds, if not thousands of properties to investment pools of a minimum of $50 million or more.  These aggregates were auctioned to the highest bidder which means that only Wall Street investment syndicates, hedge funds and institutional investors could participate.  Important note:  at the level these investors were participating, they have little to no interest in community strength or development, sad indeed.  Lastly, to make things worst, the winning bidder were required to convert these homes into rental properties for an unspecified period of time, adding to a weakened national economic market....

 

You get the picture?  The questions we need to ask ourselves:  Should the federal government dictate how investors best utilize purchased properties?  Will this implemented plan actually worsen California's collateral housing market damage long term?   How will this action affect local small investors?  Are we experiencing a 'false' sense of economic housing recovery?  How will this affect taxpayers?  Why would Fannie Mae, Freddie Mac & the FHA receive such a 'reduce' return through bulk selling? 

 

Stay tuned to the signs 2013.....