The issue: It’s disheartening to see that some of the same firms that pumped up the real-estate bubble until it popped are now in a position to profit from their handiwork

Traditionally, big institutional investors avoided single-family homes. The purchases tended to be time-consuming, one-on-one negotiations with the seller. The properties were widely scattered, making oversight difficult.

THEN CAME the Great Recession, when the prices of not only individual homes but whole neighborhoods crashed, adding “underwater” and “upside down” to the American financial vocabulary for homeowners who owed more on their houses than they were worth.

Now, big investors — hedge funds, specialty real-estate funds, institutional investors and big banks — are pouring what The Washington Post calls “unprecedented” amounts of cash into distressed real estate markets.

The big money is attracted to areas that were particularly hard-hit by the recession. Real estate executives tell The Post that institutional investors account for as much as 70 percent of sales in some Florida markets.

The result of this speculative money is that prices have been rising fastest in the worst-hit home markets, even though economically not much else has changed in those markets. The industry standard Case-Shiller indices show prices rose 23 percent in Phoenix, 15 percent in Las Vegas and 11 percent in Miami over the past year, while prices are up more than 8 percent nationally.

INVESTMENT FIRMS are employing teams of lawyers and researchers to seek out distressed properties that undoubtedly some banks are happy to unload en masse in all-cash deals. Largely left behind are ordinary home buyers who, in addition to facing competition from the big outfits, have to go through the increasingly laborious and time-consuming process of obtaining a conventional mortgage.

The big investors fix up the homes, then rent them out, raising the question: In a tight market, who pays of all of this? The answer, in many cases: You do. The biggest client of the Fort Lauderdale-based real estate investment firm is the federal Section 8 program that subsidizes low-income renters. The Post reports that Section 8 provides more than 60 percent of the revenue to the firm, which is backed by Canadian investors.

THE CONVENTIONAL wisdom is that there will be no real economic recovery until there’s a real-estate recovery.

It’s disheartening to see that some of the same firms that pumped up the real-estate bubble until it popped are now in a position to profit from their handiwork. And then there is the very real question of what will happen to these markets when, at some inevitable point, the big investors will want to take their profits and get out — especially if they sense they’re in the process of creating another unsustainable real-estate bubble.

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