There is concern that the residential real estate market could be facing the dreaded double dip. To those who are not stock market mavens this essentially means that the short recovery we have seen will be followed by another downturn.
The idea was brought up by Brian Taylor of the hedge fund Pine River. And it does align with my observations.
We had a slight uptick in the market in the 4th quarter of the year. This coincided with tremendous incentives offered by the Federal Government for new home buyers. Essentially the government subsidized the upturn not the marketplace.
Now that the effects of the government subsidy have run their course, the market is back in control. And the market does not have confidence we have hit a true bottom. Nervous buyers and sellers do not create a great deal of confidence and lower prices are typically the result.
My bet is with the Pine River team. This year will be one of nerves and concern until the marketplace sees the strong potential of profits.
Hedge fund firm Pine River, which makes big bets on housing, is bracing for a double dip in that market, its chief executive officer said on Tuesday.
“There are still issues in the housing markets and it would not surprise us to see the recovery turn down,” Brian Taylor, who founded the $1.6 billion hedge fund eight years ago, said at the Reuters Private Equity and Hedge Funds Summit in New York.via Reuters