Reply to Wall Street thinks US homes are overvalued by as much as 30+%

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Reply to "Wall Street thinks US homes are overvalued by as much as 30+%"

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[quote=Anonymous]You either didn't read or didn't understand the article.

It profiled two publicly traded companies that are in the business of buying homes from sellers, and then of course hoping to resell them at a profit (they usually do some cosmetic improvements and what not).  In theory, sellers are happy to sell to these companies for slightly less than market to avoid R/E closing costs and the hassle of finding a buyer...it's usually like a 5% - 10% "discount".

It said that the companies' stock prices are about 30% less than the value of the homes they own.  In reality, that is more a reflection of how these companies are managed, where they own homes and how good of a job in the past they have done in placing their investments.

There is also a time value issue for these companies.  They use a ton of debt to acquire homes, so if the plan was they flip them in 60 days and now it takes 120 days, well that is additional interest payments and other costs to that company.

I get that Headlines get clicks...but the article is kind of plain vanilla.[/quote]

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