Unstructured Finance

Cash is king in housing

By Matthew Goldstein

It’s no secret that housing in the U.S. has become an investors market, especially if it’s an investor with cash to burn.

For more than a year now, we and just about everyone else in the financial media have been writing about how Wall Street-backed firms are looking to buy-up the wreckage of the housing bust on the cheap and rent out those homes until the time is right to sell them for a sweet profit. And it should come as no surprise that much of that buying is being done with cash because it’s the easiest way for an investor get a deal done quick.

Recent stats from the National Association of Realtors shows that 32 percent of all single family homes in the U.S. are being bought with that cash. But that’s not just foreclosures; it also includes homes listed by brokers. It’s a testament to how much money institutional investors like Blackstone and American Homes 4 Rent have been able to raise from high-net worth investors and others. all of whom are chasing yield in this low-yield world.

To be sure, the all-cash buying isn’t a new phenomena and actually predates the appearance of the big institutional buyers in the market for distressed homes. Back in early 2009, the NAR reports that 30 percent of all purchases were being done in cash–no doubt that was a lot of early foreclosed home speculators, including the more traditional mom-and-pop buyers/landlords.

Historically, all cash buying has  ranged around 15 percent of so. But with the Wall Street-backed firms showing no sign of turning back from building out their big portfolios of homes, expect the cash to flow freely in the housing sector for another year or two.

Ray Dalio went into this year even more bullish than we thought

By Matthew Goldstein

Hedge fund titan Ray Dalio is really bullish on stocks and all things risky–at least he was in early January.

A few weeks ago, our competitors at Bloomberg and The Wall Street Journal did a good job reporting on Dalio’s macro market thesis for 2013 when they got a transcript of an investor call (Bloomberg) and a sneak peak at Bridgewater Associates’ year-end report to investors (WSJ). But after taking my own recent look at Bridgewater’s year-end investor note–book is probably a better description for the 300-page plus bound treatise–you realize that bullish just doesn’t describe Bridgewater’s stance going in 2013.

Here’s a sampler of some of Bridgewater’s comments to investors:

“Cash in the developed world is a terrible asset.” “We would be short cash of all the major developed currencies” And this: “Bonds will be a lousy investment but cash will be worse.”

Morning line-up: Harvard, Japan and bubbles

News and views on the fund industry from Reuters and elsewhere:

RTR1SGF8We still like cash – Reuters

The Twitterati take

Harvard SWF prop. deal on ice – Bloomberg

…while other prop. buyers head for Japan – Reuters

Know your bubbles – AllAboutAlpha

Check Out Line: Gimme, gimme, gimme cash!!

USA/Check out what kids want for Christmas.

Okay, if you are reading this item on Dec. 24 and seriously looking for an idea of what to buy a kid for Christmas, your choices are likely somewhere between “The Perry Como Holiday CD Box Set” and a “Really, Stop-Tickling-Me-It-Isn’t-Funny-Anymore-Elmo.”

But no worries.  Kids between ages 6 and 18 are liking cash and gift cards even more this year, according to a new survey.

The percentage of boys who said they prefer to receive a gift card or cash for the holidays rose to 12.3 percent this year from 7.9 percent in 2008, according to a survey by the YouthBeat division of Chicago based C&R Research.