Over the past four years, the Federal Reserve has pumped an unprecedented amount of money into the banking system, which is one reason interest rates have remained so low for so long.

This new money has also found its way into many investment assets: Today, the S&P 500 and Dow Jones Industrial Average are at multi-year highs; oil continually hovers near $100/barrel; many metal commodities are near all-time highs, as are many food commodities; gold remains near its all-time high and continues to adhere to its decade-long price trend.

More money has also been funneled into housing, especially from institutional investors. Hedge funds are large buyers of single-family houses, which is a new phenomenon. Interest among these institutions appears to be growing. American Homes 4 Rent , a California-based firm specializing in single-family rentals, recently purchased 10,000 homes, making it the second-biggest owner of single-family rentals in the institutional space.

The point we need to emphasis is that more money flowing into housing from institutional investors means there will be fewer values available to individual owner-occupied buyers. We've been warning over the past year that the pool of good deals is evaporating. It's important to let clients know that the rate of evaporation is accelerating.

 Courtesy of Jessica Regan.

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