Could private equity help save the housing market?

Private-equity firms are buying up foreclosed homes to turn them into rental properties, with two firms recently pledging to invest $1 billion each in the next few years, according to Bloomberg. The move builds on a recent push by the Obama administration to turn some 200,000 single-family, underwater homes into rentals to revive the housing market. This will include homes held by Fannie Mae and Freddie Mac, which holds about 32,000 homes that were foreclosed upon.
Associated Press

Yves Smith, however, is skeptical that buying (and managing) these properties en masse will appeal to the private-equity market as a whole, at least while housing prices are continuing to fall:

They might get a few initial deals at a super discount BUT residential real estate is a huge hassle to manage and to earn PE returns, I strongly suspect they need decent to good home price appreciation. Remember when investment banks bought servicers and subprime originators in late 2006 and 2007, convinced they were buying on a dip? They were trying to unload servicers to [hedge funds] in 2008 (I know because I had to discourage one in a major way). Just because something is cheap does not mean it might not get cheaper.

While housing prices recently hit a new post-bubble low, some are convinced that the market hasn’t hit bottom yet. So other private-equity firms — and others potentially interested in vacuuming up foreclosed homes — might not be eager to take on the risk, at least yet.