Wall Street’s Real Estate Grab Drives Up Home Prices

Wall Street’s Real Estate Grab Drives Up Home Prices

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The housing recovery is here. But it’s predominantly Wall Street investors—instead of ordinary homebuyers—who are buying up thousands of homes in some of the nation’s most depressed markets hit hardest by the financial crisis.

The New York Times’ Nathaniel Popper writes, “The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Some are already wondering if prices will slump anew if the big money stops flowing.”

Investment companies like Blackstone Group, which has already bought 26,000 homes across nine states, and Colony Capital, which spent $250 million on 10,000 properties in California, are renting out the homes, with the possibility of selling them at a profit when prices rise. Fitch Ratings warned last week that prices for single-family homes in the regions with the biggest housing rebounds had been outpacing the growth rate in the local economies and “could stall or possibly reverse” if big investors start selling. -  Read more at The New York Times

HIGHER TAX REVENUES A DRAG ON GDP    Federal Reserve Bank of San Francisco economists Brian Lucking and Daniel Wilson released an analysis Monday that suggests that rapid deficit reduction could reduce economic growth. They find the primary cause is the surge in tax revenues.

“The federal deficit is projected to decline faster than normal over the next three years, largely because tax revenue is projected to rise faster than usual. Given reasonable assumptions regarding the economic multiplier on government spending and taxes, the rapid decline in the federal deficit implies a drag on real GDP growth about 1 percentage point per year larger than the normal drag from fiscal policy during recoveries.”  -  See the analysis here

AMERICAN MANUFACTURING SHRANK IN MAY   The Institute for Supply Management’s manufacturing index fell to 49 from 50.7 last month. The report indicates a contraction in manufacturing for the first time since November 2012, when the index dipped to its lowest level since June 2009, at 45.8 percent, after Superstorm Sandy devastated the East Coast. Many analysts are still expecting manufacturing outputs to increase in the second half of the year. -  Read more at The Washington Post

OBAMA TO COMBAT PATENT TROLLS    President Obama today will announce five executive actions and propose measures aimed at stopping abuse of the U.S. patent system. Firms can currently acquire patents to force companies into expensive litigation. These “trolls” say they are doing nothing wrong and that all patents are approved by the Patent Trademark Office.

Obama will ask Congress to pass legislation that would allow sanctions on litigants who file lawsuits deemed abusive by courts. Meanwhile, the Federal Trade Commission and Justice Department are examining whether some patent-holders are disrupting competition in the high-tech markets. -  Read more at The Wall Street Journal

IRS HEADS TO THE HILL FOR FIFTH HEARING … SO FAR    The House Ways and Means committee on Tuesday plans to hold the fifth hearing on the IRS’ excessive scrutiny of conservative groups applying for tax exempt status, bringing some of the organizations allegedly involved to testify.

House Ways and Means Committee – Tuesday, June 4 at 10 a.m.
See the hearing advisory here

The agency will also be the subject of a House Committee on Government Oversight and Reform hearing on Thursday to discuss an Inspector General report that was released today showing the agency spent $50 million on conferences since 2012.

The House Committee on Government Oversight and Reform- Thursday, June 6, at 9:30 a.m.                 See the hearing advisory here

Brianna Ehley is the former Washington Correspondent for The Fiscal Times. She is currently a reporter on Politico's health care team in Washington, D.C.