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Blackstone's Home Buying Binge Drops 70% From Its Peak Last Year
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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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.
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).
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.
All that unaccounted for Pentagon money has to go somewhere.
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.
All the building up of the eastern half of Virginia is federal money-spewing.
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...
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.
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?
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...
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.
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.
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.
By "kids," you obviously don't mean "banker's kids."
Why yes Rand. Not the bankers kids. I will let them have art and an early death.
You Corzined the fuck out of that one. Nice show.
Isn't David Stockman involved in Blackstone in some way?
From Wikipedia..."Stockman resigned from Blackstone to start his own private equity fund "
We don't have a housing crisis. We have a stupidity crisis.
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.
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
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.
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.
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!
Blackstone's more appropriate name is Blackball.
Crickets chirping
Blackcock U.A. (up ars)...
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.
Fascism at its best. Who is CEO there? Oh yeh.... pure coincidence.
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
Two year jock itch = herpes.
You definitely ARE fucked.
There's no reason in these days of cheep condoms, for pederasts to acquire infections.
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...
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.
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!
shhhhhh...even if you get a job in the Eagle Ford or Permian basin gook luck finding housing you can afford....
Victoria Fcuk U Nuland would be an ideal mate for you ?
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!!!
A voice of reason in a village of the damned.
I gotta say "I fucking love the sarcasm", and "yes, we are all fucked" (no sarc)
BTW Lam-i-sil
The be cure for jock itch is free ballin. Fungus hates it.
The names Bond...
Gold Bond.
And the real bad news is that you also on death row and running out of appeals. Living on devils island is no way to carry on.
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.....
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.
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.
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...
Where are you located?
Putting it another way, we have an oversupply of overpriced homes and too expensive rents.
and thus by law of opposites an undersupply of the contrary which is the cornerstone of decent urban living.
Civilization marches on its head.
Fuck Blackstone, and fuck those Wall Street wankers who don't give one shit about real people; fuck those mammon lusters to the hottest corner of Hell.
The hangings and tar and feathering's are so long overdue.
I fear it will be worse than simple floggings this time.
Will make revolutionary France look like a picnic.
I will cheer if I'm still animated.
Images of Benito and Clara come to mind
Make sure your karma allows your full spiritual reincarnation, even if your current tenure runs out.
The ghost of Mrs Muir comes to mind when its about kicking the blood out of Blackstone's bloodless heart and ghoulish nuts.
Like in the bullring triumph of matador you will be awarded the ears and tail of that mad, bad bull of WS Dracula land.
I'm a student. I make about as much from the government as someone that makes between 12 and 14 per hour. I don't work. Can I buy a house?
Where do you live?
If you do, I'll shoot you myself.
WS does nothing for anyones benefit other than their own.
The WH and the FED must have given them the houses for free and tax deductions till the end of time....
So they did much more than just keep people who saved responsibly from buying their first house......
Blackstone
Plain stone and rubble soon!!!
Blackstone bought the properties as a long term investment. As long as the housing they have does not get taken over by meth labs, member of drug posses or welfare cases, Blackstone can always unload the real estate in a few years at a reasonable profit.
Blackstone would be smart to buy blocks of homes, rent them as Section 8 (Hud), and get govt. checks guaranteed along w/long leases. These tenants will protect their eligibility w/hud. Also, Section 8 will pay for all damage done by tenant. Around Tampa area they get 20% higher rents. In todays enviroment how do you beat that?
Then I would cycle according to market buying other blocks and turn rentals back to single - family and sell those and move those tenants to different houses i'm trying to rent.Rinse and repeat.
If I myself got back into rentals I would buy a class B or C motel/Hotel and renovate to apts. while keeping existing motel/hotel licensing so no long drawn out evictions - just call the Sheriff! Rent weekly so rent is comparable. These also have built-in amenities such as pools, tennis courts, etc.
Good idea, if there is no hotel occupancy tax. Might get bled otherwise (for example Austin, TX tax is 15%).
But as a Corp. or LLC I do not pay taxes.
The end user of my product does.
I did rental properties for a dozen years.
I am very proficient as a manager - I could sell ice to a Eskimo.
Most years I had a positive vacancy factor (collected more $$$$$$ than scheduled)
My concerns were always no-pays and trashed units.
Looks like in Fl. that strategy would cost me 5% more than listed as Apt. in taxes.
As I would know my baked in costs in order for no.s to work 5% on a $800.00 rental is $40.00 bucks more. Not a deal killer.
Remember too, The costs to evict. If a tenant turns on me I want their ass out of there yesterday.
Brought to you by NAR.
LOL, Yes, it's always a good time to buy!!!!!!
Im getting a rubber suit cose when this shit hits the fan its gonna get nasty!
Rents are plunging in my area. Every absent Landlord is trying to dump their rentals....Fugly.
Very Fugly.
But...very happy for the tenants who are smart enough to realize to demand 10-20% lower rent price and tell the local Management Company [for the Landlord] to shove it.
This article is garbage. Of course they slowed down their acquisitions dramatically, last year had the largest gains and the outlook going forward is for small increase over the next couple years. Yield compression has priced out many institutional buyers in many of the desirable markets. The statement that homes are more expensive to own than the bubble years is garbage too. If you look at the price to own vs the price to rent, in many markets it is significantly cheaper to own a home than rent one. If you look at median incomes compared to median home price they are more affordable than the bubble years in most markets.
I agree the Blackstone securitization is a joke since they have no collateral and the interest rate they were able to sell the paper for was absolutely absurd. Other than that aspect of the article everything else was incorrect. I don't know what world you live in that you expected to continually buying homes at the same pace. The easy money has been made. There will still be purchases but nowhere near at the rate homes were being bought because the yields have compressed and large home price appreciation isn't expected going forward.
Strain your gnat. Enjoy that camel!
No comment of substance, just an odd response. I would guess its a personal attack but its the oddest response I have ever seen and I don't know what to make of it. I looked at some of your other responses and they have all had no substance. Better to post random garbage than actually come up with some original thought I guess.
That comment is a marker.
What do you mean by that?
I really don't wanna be reading ZH in 10 years where most of the comments are...'We are all fucked...'.
no worries....in a decade ZH will be a long ago place from a very bizarre time.
Is this the same Blackstone that was mentioned in this article about the missing airlinerhttp://www.redicecreations.com/article.php?id=29355
Carpetbagging scum like the individuals behind Blackstone, etc. should be tarred, feathered, and run out of town on a rail.
I hope they take a bath, but they'll probably only get bailed out if they do.
Generations of families living under one roof, more common than we think and going to become even more common. In some cases good comes from this in other cases not so much. Too many stories of adult children with their own children moving in with parents, not working nor looking for work and living off Mom and Dad's savings. The job market is horrible no doublt about that, but the parents that are allowing their adult children to move in with them and then they sit around living off Mom and Dad? Just making more dependent on someone else not a good life lesson to be teaching to our children no matter what their age.
The bernank is pleased
Imagine how much better the economy , and life in general , would be if prices of housing was so cheap that everyone paid cash and owned their homes mortgage free....
Because houses should be for safety , security and family and not for the Tribe to trade as pieces of paper !!!!
Flashback to the Levittowns of the late 1950s. A down payment of $ 100 got you into a nice new $ 11,500 home with appliances.
http://geography.about.com/od/urbaneconomicgeography/a/levittown.htm
Or perhaps they underestimated the thrill of getting 4,000 phone calls on a Saturday morning to “Come fix my leaky toilet”, which you know not one of these Wall Street high rollers has any clue how to do.
President Barack Obama credited the investors for helping put a floor under the plunging housing market
Wasn't that the whole point?
1. Give the hedge funds ZIRP loans to take the foreclosure shadow inventory off the REO books of the Commercial Bank at prices that don't completely gut their mark to fantasy values.
2. Park those in VIE's and sundry other off balance sheet investment vehicles which are then sold back to the bag holders - I mean public (via their pension and retire fund custodians)
Result =
A win (puts a floor under the plunging housing market),
Win (takes fantasy valued inventory off the banks hands and "recapitalized" said banks with fresh fed ZIRP fiat),
Win (gives the hedge funds and invesntment banks carte blanch to further rob the muppets with a speculative investment vehicle full of, what did Goldman call them in the emails read at those Senate hearings, "crappy deals"?)
Lose proposition and who doesn't love that, except of course for the losers (and thank G_d their votes don't matter come auction - I mean election time!)?
comob, those were great points.
But Obama cares about only TWO "wins":
1) Did they contribute to my reelection campaign fund in 2012?
2) Will they enrich me and my family when I leave office?
Housing bubble #2 will leave a mark.