Are housing investors creating a new bubble? Cash purchases cloud outlook for market

Housing has emerged as the brightest spot in the economy this year, but some analysts are questioning whether the market’s recovery is built to last.

Home prices, sales and construction have increased sharply in the past year after six years of relentless declines, suggesting a classic recovery and adding fuel to a broader economic expansion. For the first time since the Great Recession, the housing sector started adding jobs in areas such as construction over the past few months in a sign of a dramatic market turnaround.

 

But a close look at the numbers reveals that much of the housing activity is driven by abnormal conditions stemming from the housing crisis.

Much of the pickup in sales and prices has been powered by investors who, convinced that the market is bottoming, are scooping up bountiful supplies of distressed and foreclosed properties at bargain prices and often paying with cash.

Read more: http://www.washingtontimes.com/news/2013/apr/2/are-housing-investors-creating-a-new-bubble/#ixzz2PUUbxPQH
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