Blackstone's Home Buying Binge Drops 70% From Its Peak Last Year

Tyler Durden's picture

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

The whole story about how private equity firms and hedge funds have steamrolled into the residential home market to become this decade’s slumlords is a story covered on this blog before mainstream media even knew it was happening. I first identified the trend in January of last year in one of my most popular posts of 2013: America Meet Your New Slumlord: Wall Street.

Since the, I’ve done my best to cover the various twists and turns in this fascinating and disturbing saga. Some of my follow up pieces can be read below:

March 2013: Is the “Buy to Rent” Party Over?
May 2013: Carrington Bails: More Smart Money Leaves the “Buy to Rent” Game
July 2013: The Las Vegas Housing Market has Gone Full Chinese
August 2013: Welcome to the Housing Recovery: Rents are Rising, Incomes are Falling
October 2013: A Closer Look at the Decrepit World of Wall Street Rental Homes
February 2014: Is “Buy to Rent” Dead? – Rents on Blackstone Housing Bonds Plunge 7.6%

With all that in mind, let’s now take a look at the latest article from Bloomberg, which points out that Blackstone’s home purchases have plunged 70% from their peak last year. Perhaps they overestimated the rental cash flow potential of indebted youth living in their parents’ basements?

From Bloomberg:

Blackstone Group LP is slowing its purchases of houses to rent amid soaring prices after a buying binge made it the biggest U.S. single-family home landlord.

 

Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm. After investing $8 billion since April 2012 to buy 43,000 homes in 14 cities, the company has narrowed most of its purchasing to Seattle, Atlanta, Miami, Orlando and Tampa.

 

President Barack Obama credited the investors for helping put a floor under the plunging housing market and consumer advocates such as the National Community Reinvestment Coalition later blamed them for soaring prices in some cities.

 

While institutional purchases nationwide fell to a 22-month low in January, corporate investors were more active in the Atlanta region, buying 25 percent of homes sold, according to data firm RealtyTrac. That helped drive up Atlanta prices 37 percent since the March 2012 trough.

Now read this fantastic article from real estate analyst Mark Hanson, who points out that homes are much less affordable now that they were at the peak of the most recent housing bubble.

Never fear serfs, now that homes have once again become unaffordable, the banks are bringing back subrpime loans so that Blackstone can sell back to the muppets.

Ah, crony capitalism at its finest.

Full article here.

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Dr. Engali's picture

It doesn't take a rocket scientist to figure out the fact that if people can't afford an over priced mortgage with a job (towards the peak even having a job was questionable), they sure won't be able to make an over priced rent without a job.

icanhasbailout's picture

But that doesn't mean the Fed won't fork over actual (if just-printed) currency in exchange for a mortgage on which no payment can ever be reasonably expected. And before the Fed must actually realize any losses it will get the taxpayer to cover them 110% (AKA at a profit).

 

 

willwork4food's picture

Must be something going on. Around here (SE VA), there are fairly large new housing developments going up and, unfucking-belivable, quite a lot of industrial/new retail spreads springing up. Guess everyone wants to live near the ocean.

Independent's picture

All that unaccounted for Pentagon money has to go somewhere.

AGuy's picture

Its very possible that your simply getting a lot of people and business moving out of MA,CT,NY,NJ,MD over the unbearable taxes and nanny statism. I too am plannig to head south of DC this year, and I know at least half of dozen of people also moving south. In the Northeast, the most common things are "home for sale", "this retail space for rent or purchase" signs. I see lots of retail business closing doors.

icanhasbailout's picture

All the building up of the eastern half of Virginia is federal money-spewing.

Normalcy Bias's picture

Nasty logic and reason no longer apply ...because Obama!

Sit back, find out who the Baby Daddy be on Maury (pronounced "Murray" apparently), and let your employed oppressors chip in (with a gun to their heads) and pay your bills.

Welcome to the 'Transformation of America!'

...yeah, this plan is going to work...

rlouis's picture

When gov. 'officials' make decisions based on manipulated, artificial data, the results are inevitably going to be bad, and they compound upon themselves.  Fugging sociopaths.   

DIgnified's picture

https://www.sec.gov/cgi-bin/own-disp?action=getissuer&CIK=0001393818

This page lists one Nathaniel Rothschild as a 'Director' for Blackstone Group LP.  Why am I not fucking surprised?

Normalcy Bias's picture

I guess the game plan is to continue to screw the hoi palloi for everything their worth, and then attempt to crush them under the guise of 'Homeland Security,' when they've finally just had fucking enough already...

SWRichmond's picture

the old days the rentier state could be established without much resistance.  now with the Internet making information flow very easily re establishing the rentier state requires the surveillance state and the police state.  people are angry everyone knows it.  

anyone who works has a chance at some semblance of Independence and these are the people who must be controlled.  they must be controlled politically they must be controlled emotionally they must be controlled economically. They  must be controlled physically if necessary because they're the only ones who produce anything, any real wealth that can be extracted or stolen.

the very rich produce nothing.  The  half of the people in the United States who  live on government subsidy produce nothing either so they are easy to control.  it is the  producing class who pose the greatest threat  to the oligarchs. They  still believe in their own independence and still want to be independent in the future. if they stopped working the oligarchs would lose everything.  if they ever actually assert their independence the oligarchs would lose  everything.  all the weapons are aimed at them.  they have to be encouraged to believe that if they work hard enough they can be independent but they have to be thwarted  from accumulating any real wealth that could challenge the oligarchs.

Buck Johnson's picture

Exactly, take everything and then leave with the Homeland Security and police state being a rear guard for the 1 percent who left.  Then when things are at it's lowest they come back to buy back state assets for pennies on the dollar and we are turned into a third world shit hole.

BlindMonkey's picture

Student debt taps out the kids for 10 years after college. That is just in time for divorce to kick in a rob them of another 5-10 years of home ownership. By the time someone can afford to buy a home, they will never live in it mortgage free. Debt slaves for life. Welcome to the new normal that closely approximates hell.

LetThemEatRand's picture

By "kids," you obviously don't mean "banker's kids."

BlindMonkey's picture

Why yes Rand. Not the bankers kids. I will let them have art and an early death.

LetThemEatRand's picture

You Corzined the fuck out of that one.  Nice show.

LetThemEatRand's picture

Isn't David Stockman involved in Blackstone in some way?

waterwitch's picture

From Wikipedia..."Stockman resigned from Blackstone to start his own private equity fund "

Promethus's picture

We don't have a housing crisis. We have a stupidity crisis.

willwork4food's picture

Likely. A lot of my son's friends/peers (24yo) are getting married, buy a small fixer upper. That tells me the ones that vacated that fixer upper are going to greener pastures, aka: wife wants a nice BRAND NEW HOME. Only way to make this craze fit logically around here, in this age.

As an aside, I was in Mason City Iowa a couple years ago, a small city in fly over country about 100 m South from MN. By all measurements I saw their economy was booming. Modest side by side house going for 200k + in a small city! Couldn't believe it.

prains's picture

not sure psychopaths and narcissists are stoopid, they are in one sense, but it's the short game that only has their attention. The crisis is the conflagration of them at the top

PT's picture

Psychopaths and narcissists lend money to stoopid.  Then they foreclose on stoopid.  Then they convince guvmint (really themselves) to buy all the bad debt and give them more money so they can lend more to stoopid.

It's a many-sided con:  "You must give me money so I can lend it to stoopids so they can borrow money from me and buy houses and I must get my bonuses because I am smarter than everyone else and oh no the stoopids couldn't repay me therefore you have to give me more money to lend to ..."

Without the stoopids, the theft would be so obvious that even stoopids could see it.

new game's picture

what is driving hsg in IA is ag. real josb producing food, and yea i don't want to cut up hogs, but many jobs in all the supporting structure, from tileing fields to welding ect. keeping the machine going. also big time end users of chems and fuel.

all is semi-healthy in IA...weather can be the shits tho...(im from MN)simular up there.

Bangin7GramRocks's picture

Those poison GMO crops sure are profitable. Whatever the government doesn't pay you to burn, gets mass produced into food that rots your body from the inside. Who says you country folk are slow and stupid!

yogibear's picture

Blackstone's more appropriate name is Blackball.

markar's picture

they've cut back now that they've picked all the low hanging fruit. Only thing left is higher priced homes that don't pencil out as rentals.

Clowns on Acid's picture

Fascism at its best. Who is CEO there? Oh yeh.... pure coincidence.

StopIt.Now's picture

So... let me understand the comments today.

- We are NOT talking about the article, which does a great job re-explaining this massive new RE-bubble.

- We are talking about web browser problems, NSA bugs, and tin foil hats.

- But what I want to talk about is my jock itch, now two years old, with no remedy in sight. 

And these ARE the reasons I LOVE zerohedge.com so much.  Only here can I find the perfect storm of brotherly love... for precious metals, for real facts and truth, for bitter sarcasm, for Country, and for hope.

This core of American resolve is of course is well-balanced with the oft-mentioned comments of other equally caring-but-realistic brothers; those who describe their resignation to our ultimate fate; we are ALL fucked. Horribly fucked. Really raped AND fucked.

Obama IS fucking us, Putin is getting READY to fuck us, and Bernanke ALREADY fucked us. China will first let us fuck each OTHER over, and then they will fuck ANYONE else left.

So continue to buy silver, stash food, enjoy your job (if you have one, cuz I don't), watch Netflix nightly, vote for reformed politicians, and keep the faith... but just keep in mind...

WE ARE ALL FUCKED

WE ARE ALL FUCKED

WE ARE ALL FUCKED

WE ARE ALL FUCKED

WE ARE ALL FUCKED

WE ARE ALL FUCKED

WE ARE ALL FUCKEDWE ARE ALL FUCKEDWE ARE ALL FUCKEDWE ARE ALL FUCKEDWE ARE ALL FUCKEDWE ARE ALL FUCKEDWE ARE ALL FUCKEDWE ARE ALL FUCKEDWE ARE ALL FUCKED

OldPhart's picture

Two year jock itch = herpes.

You definitely ARE fucked.

Offthebeach's picture

There's no reason in these days of cheep condoms, for pederasts to acquire infections.

new game's picture

thanks for the re assurance of the faith that we are fucked, cause i couldn't agree more as i travel south in tx searching for a possible solution to this dilema. oil field jobs are plentifull for skilled workers;  ie class 3 welders, cnc machinists, work over experience, machine rebuilding-all the conglomerate of oil field assemblies.  i am here in midland odessa-it is bleak outside but jobs are plentifull. my problem is i don't have these relavent skills. so the locals get their wages push higher as more and more show up to scratch out a living in a shit hole. very depressing scenery, but i had to come and take a look. back to east tx where at least there is trees. people are nice and yea i think tx has lots of potential. just to find a job at 57 is a daunting task(i am finding out first hand. for every job i qualify for, someone 30 years younger and 10 deep...) yea its fucked when millions are looking for the same shit...

edit; i am optimistic, but reality is a bitch, bitchezzzz, so back to MN eventually, unless someone see my sincerity. at least it is finally warming back home...

Ignorance is bliss's picture

I am 46. I hear your story repeated often among those just a few years older then me. I still have a very good job, but 40% of my peers just lost theirs. I plan on starting a small business before my head shows up on a pole. What a fucking mess.

new game's picture

I is bliss; yea I do have the where with all to start some kinda bussiness as i once was in business(RE broker), maybe that is a great idea. really who can manage my future better than myself...thanks!

bookwurm's picture

shhhhhh...even if you get a job in the Eagle Ford or Permian basin gook luck finding housing you can afford....

nathan1234's picture

Victoria Fcuk U Nuland would be an ideal mate for you ?

 

 

UselessEater's picture

seriously stop it now.... I got "We Are All Fucked" in capital letters humming like a sappy little show tune through my head ;)

you still gotta live your life while keeping an eye on this shite; we maybe pawns but screw 'em I want some joy in the lives of 'me and mine'. Diminishing the value of life is far tooo accepted in my birth place Zimb, there is always a way to live decently - it takes soliatary time and work to find it, but its possible, it requires flexibility and determination without worrying that your friends and neighbours have not got a clue; they'll hold you back more often than not because they fear there is no other way without sacrifice - turn it around and there is always another way with some sacrifice......not all will be fucked!!!

migra's picture

A voice of reason in a village of the damned.

HisNameIsRP's picture

I gotta say "I fucking love the sarcasm", and "yes, we are all fucked" (no sarc)

joego1's picture

The be cure for jock itch is free ballin. Fungus hates it.

Relayer74's picture

The names Bond...

 

Gold Bond.

jagercali's picture

Double stars....very well put....make sure you go to infowars.com....Peter Schiff.....Marc Faber.....Gerald Celente.....Michael C Rupprt....enjoy the reality that the MSM doesn't want to tell us.....email me with your top heros....

 

toddbizz@gmail.com

 

The Russians are coming.....

underman's picture

Got friends in Seattle trying to buy a house.  They've been outbid 4-5 times in the last couple months.  They don't know they're up against Blackstone.  I can't being to talk to them about the real estate market.  They wouldn't be friends after I'm done spewing.

OldPhart's picture

Mom and Step-Dad put their house up for sale here in Apple Valley, CA.  Not even a major town in the scheme of things.  Had a bid in one day, another the second, and a cash buyer bought for $10k above their asking price.

When I start seeing Home Equity Loan offers in the mail again for my house at $350k, I'm selling and renting.  I'll use the difference in the $40k that I still owe to pad my gold/silver stock of hard metal.

AdvancingTime's picture

I have owned an apartment complex for many years and we are currently experiencing the largest number of vacancies we have ever had. Many houses in the area are empty or under leased. In 2005 and 2006 prior to the housing collapse many people were looking at second homes, for investments or as a vacation getaway.

Today not only have many people shed the extra home many have doubled up with family or friends reducing the need for housing. We are pushing on a string and calling it demand when someone who can barely pay the rent is encouraged by the government to buy a house they can neither afford or maintain. We have a shortage of "qualified" buyers and renters. More on how low interest rates are hurting housing in the article below,

http://brucewilds.blogspot.com/2013/12/super-low-interest-rates-disservi...

Blankenstein's picture

Putting it another way, we have an oversupply of overpriced homes and too expensive rents.

falak pema's picture

and thus by law of opposites an undersupply of the contrary which is the cornerstone of decent urban living.

Civilization marches on its head.