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Comment by yardie | Hacker News Reader

That's not exactly true. A lot of REIs are built on complex structures. The SF estate market might be fueling other investments. Once one starts to collapse it can have a domino effect. Basically if investors were expecting 10% annual return and you tell them this year might be 1-2% they'll take that money and move it elsewhere. Now you have to raise money or sell.

When I used to live in downtown Miami there were high rises going up everywhere with prices starting at 500k-1mm. These same places would later be short sales for 150-250k after the GFC. There was a glut of luxury apartments and few buyers.

I wanted to buy one of these condos but couldn't find a bank that would give me a loan. They're were petrified at what was happening there

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REI means Real Estate Index? Or do you mean REIT (RE Investment Trust)?

I think Real Estate Investment.

> When I used to live in downtown Miami there were high rises going up everywhere with prices starting at 500k-1mm. These same places would later be short sales for 150-250k after the GFC.

This sentence doesn't make any sense to me. The definition of a short is to sell something you dont' own with the explicit intention of buying it back later at a lower price.

How can you sell a condo you don't own? and then why plan on buying the condo back at a later date?

You're thinking of the practice of shorting stocks, which is different than a short sale. From Wikipedia:

A short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property. In this case, if all lien holders agree to accept less than the amount owed on the debt, a sale of the property can be accomplished.

Well how about that. I learned something today!

I appreciate you taking the time to write this out!

https://en.wikipedia.org/wiki/Short_sale_(real_estate)

In real estate a short sale is when the bank allows the borrower to sell the property for less than what they owe on it.

I buy a condo for $500k, sell it for $250k in a short sale but I need the agreement of the lienholder in order for this to happen.

<< Basically if investors were expecting 10% annual return and you tell them this year might be 1-2% they'll take that money and move it elsewhere. Now you have to raise money or sell. >>

How can they take that money and move it somewhere? Most such investment contracts don't allow it. Am I missing something?

They stop adding more money in. Less future investment?

Some REITs are publicly traded. Investors can simply sell their shares and buy into something else.

And Miami is hot again from foreign (Russian and South American) buyers. Blocks of housing in Edgewater are razed to put up huge luxury condos.

My wife (Brazilian) and I joke that we won't have to take the kids all the way to Brazil. We just need to go to Miami.

Given the way the economy has crashed, this won't go on for long.

Which economy has crashed?

Probably Brazil's. It's a shitstorm at the moment. I think the smart, rich brazilians moved their money overseas, Miami for example.

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