Just wondering what people’s thoughts will be on an idea I’ve been researching.
(I’ll keep it short but if you want any websites to numbers I claim let me know)
Currently as we all know there’s a huge rental paying problem about 17 million Americans are behind as of 12/14/2020 and 5.7 million of those are likely to be evicted in the next 2 months. (This doesn’t consider commercial)
With this new stimulus evictions were supposed to be prolonged but it’s only been prolonged until January 31, 2021. Luckily many states have an extension (About February 14) with the exception of Maryland,Nevada,New Jersey, New York, and Oregon which have farther down extensions June, end of pandemic, etc.
I’ve talked with a couple of real estate lawyers and they say they are already getting a flood of evictions (commercial and residential) and are expecting a “huge tsunami of evictions” (not my word theirs.
Since hedge funds are currently holding a huge amount of real estate bought in 08 for cheap ( top 50 real estate hedge funds held about 192.876 billions dollars of real estate in 2012) They’ve definitely been stocking up and there portfolios are probably 10 fold by now since (that’s what’s caused market value increase) but now with a huge amount of evictions (that they will be giving out) they will loose a huge amount of profit that the hedge was making.
Ultimately this will lead to an initial drop in home values once evictions occur, and a second greater drop once they try to liquidate their real estate properties.
This part I might be wrong but I see two ways they liquidate, the first is they sell to banks in packages at reduced prices knowing eventually the government will bail the banks out when the values drop on the properties and take profit from 08 or if they are actually evicting people out of stupidity, they themselves put the properties on the market to sell.
Either way restaurants and people get evicted, home values drop and the stock market being pumped on inexperienced investors gets a quick scare dump.
I might be completely wrong so I’d love to get peoples opinion and especially people in the real estate space.
Tldr: Commercial/Home Evictions will reduce rental income in hedge funds causing them to Liquidate real estate dropping the housing market and stock market.