Monday, October 6, 2008

Housing Market Backfires on Greedy Investors

Private equity firms which invested in the South Bronx (as well as Harlem and East New York) while looking to capitalize on the over-inflated housing market may have very well cast their nets to far.

The New York Times' Charles Bagli reports that these firms (like the rest of the country) paid too much for affordable housing properties they were looking to turn market rate for a nice profit. For the most part, they've been unable to garner increased rental income, and haven't made too many improvements to the buildings. They've also tried to begin evicting tenants paying low rents. Now many of these buildings are facing foreclosure.

Greed will backfire every time. The following quote from the Times' article from the president of the Community Service Society sums up BoogieDowner's thoughts quite nicely:

“This was a combination of people trying to make fast bucks in a very overheated housing market and regulators taking the view ‘anything goes,’ ” said David R. Jones, president of the society. “It’s not only people at Lehman Brothers who are suffering in the city. Someone should be held accountable for this kind of wrongdoing.” [NY Times]

Let's hope that the communities these equity firms exploited are able to ride out these tough economic times.

*Pic of fat-cat counting his money courtesy of*


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