by Wolf Richter, Testosterone Pit.com:
Home prices have jumped around the country, in many cities over 10%, and in some over 20% on an annual basis. “Recovery of the housing market,” is what this phenomenon has been called. Everyone from President Obama on down has taken credit for it, particularly the Fed, whose handiwork this is.
The nearly $3 trillion that the Fed has printed since the financial crisis had to find a place to go, and some of it went to private equity firms and hedge funds and REITs, and they’ve been gobbling up vacant single-family homes from foreclosure sales as fast as they could. And this has driven up prices. It’s part of the concept of the “wealth effect” that the Fed has been citing as one of the reasons for the waves of QE. It has worked wonderfully – assets values ballooned across the board. And it fixed the housing market.
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