re: Homebuilders cancelling contracts to sell for more on market

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How long is the short duration? Do you expect them to start selling the moment the market turns?

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short duration is not how long you own, but the interest rate sensitivity - they are able to buy the homes slightly above market value because they fund at what was libor + a spread between 140 and 200bps - much cheaper than what funding cost were for the average home buyer a few years back...the buyers of the securitization or fund are earning much more than they could on ordinary high quality adjustable rate assets

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They own enough of it that they fight like tooth and nail to keep carried interest from being ordinary income. They also know (correctly) that real estate is a GREAT investment strategy to grown wealth. Aren't many of them paid fees based upon assets under management?

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any this case, the fees are built into the beginning of the transaction - there is not enough spread or excess return in these transactions like you would have in a private equity trade with a 4-5 year horizon.

they only started investing in single family residential real estate when they numbers made since, REITS have been investing in apartments and commercial real estate for ages - nothing new

lots of managers are paid fees based off of assets under mgmt - it incentive's good management - if they perform well others will invest