Why are investment firms like Blackrock and others buying up single family homes across the US?
By - Zimavishon
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I have not read the article, but I remember the CEO of Marriott discussing their residential rental business is booming. Thus Blackrock is probably leasing these to hotel chains to compete with ABNB. They get a guarantee revenue stream from the leasee.
IMO It’s also a hedge on a market crash and inflation... hard assets vs. cash. Also explains why my wife and I cannot buy a proper house in our price range anymore, meh.
Their cost of capital is so much lower than anyone else that they can overpay and still make money.
I think I heard that they have more assets than the Fed.
Assets they manage. They don’t actually own those assets
So it is more blackstone than blackrock, but for a couple reasons.
They have a metric crapton of money, and super low interest rates, so they are snagging as much up as possible. Most of the property ends up in REITS or LPs which they then get to bill lots of fees on.
Interest rates are horrid, and so the income from rents is becoming much more attractive for the fixed income portfolio, which makes up a substantial part of retiree portfolios.
So their business is really more creating funds that they bill on, and the current environment makes the easiest way to pick up assets making these real estate products.
In summary, if I get 1 more email about fucking BREIT I am gonna lose it
I lived in Washington 29 years. Moved to AZ and never looked back!! So many things wrong with that state! It’s sad,
What did you not like? I’m living in Spokane absolutely suffering from the rental market here
Today’s 16 y/o is NEVER going to want to move to the burbs in their 20s. Besides, the job market for entry level corporate gigs is NOT remote; it’s in the office in HCOL cities.
**All** the fun is in the big cities for today’s youth. Don’t trick yourself into thinking otherwise.
The rural push benefits the 55-60 yo the most as they just pulled up their retirement plans and cashed out of the downtown homes into a comparatively palatial pad in rural areas.
That’s NOT going to be a long term trend
First, I agree no 16y/o will want to leave the city where they can do more fun things with larger groups of friends. I'm not talking about teenagers or college kids. I'm talking people after their initial entry level job.
Loads of ppl I talk to in one of the biggest cities have made mention of leaving to smaller towns/cities to buy property. Granted, these are qualified individuals able to work remotely and earn solid wage.
My point is that as millenials push for remote work and start moving to smaller cities/towns, this will slowly push development of infrastructure and other non-high qualified jobs will also follow to satiate that growth.
It'll be slow growth over time, but my theory is younger professionals will begin to migrate outside those high COL cities. Assuming Starlink gets up and running at reasonable fees, more young ppl will have access to internet for remote work wherever they choose.
Sure, once rural internet catches up. I'd totally move even farther out now that my primary work is from home, but I have to work on multiple remote computers and servers, which is a bundle of suck on satellite internet - I know this from experience.
One of two things will happen, probably both, zoning laws will change and there will be more high density housing, or there will be urban flight. If you're making 20% more, but the cost of living is 40% more, it's not with it. If your making 40% more and the cost of living is 20% more, you're ahead.
People need to learn to love within their means, the cycle we've gotten ourselves into of enslaving ourselves to lenders will have to change.
> People need to learn to love within their means, the cycle we’ve gotten ourselves into of enslaving ourselves to lenders will have to change.
Easier said than done champ. It is what it is.
Cheap credit. Archaic policy making mentalities. And Generation YOLO.
Great time to be an investor
Who do you think is training the entry level employees? If the senior people are remote so are the entry level.
You only need to live near a city to have fun there on the weekends. You don’t have to live in the actual city.
You get it.
I got a house in a small town. It's about 2 hours away from DC or Baltimore if I really want that city life experience for the night.
There's a hospital that is a 10 minute drive. While the town is small it still has all the amenities I could want. Plus there's tons of our doorsy stuff to do.
Oh and the housing prices are low in comparison to a lot of these major cities.
Incomes and cost of living is relative. Definitely something to consider when looking around. Go into a competitive field. Not everyone needs to go to college either to succeed in life.
When everyone is trying to be a doctor, lawyer, or engineer there is going to be an increased demand for electricians, plumbers, and carpenters. These jobs may start out paying less but you also don't need to fork over a fortune and a few years of your life to get a degree to do them either.
Anyone here should know that investing is about finding ways to free up as much cash flow so you can funnel it into investments. Be more frugal with your money and you'll find you have more at the end of the money to spend on investments which in turn will make you more money down the road.
Or join the military either full-time or part-time. VA loans do not require a down payment!
USDA loans don't, either, if you're in an area that qualifies and you don't have the possibility of killing someone or suffering major trauma to get it.
if you had a mortgage 10 years ago maybe
Such a dumb take, not only does this ignore the vast downpayment that comes with a mortgage, all of the taxes, fees, and maintenance as well, but it completely ignores the risk. The reason rent is more is because you're paying for the convenience and lack of risk, you can essentially leave whenever you want with no risk of losing more than your rent payments. Mortgages can be lower, but you could lose everything.
Because they know housing prices are gonna continue to skyrocket
Perpetual cycle for them too. Buy up properties to rent, raise prices of houses, forcing more people to continue renting.
Also, renting is inflation-adjusted
Just to clarify for people who do not know economics, residential rentals are regularly adjusted every period (1-10 years)
Hence when everything in the economy becomes more or less valuable rental revenue will change along the with the value of that currency.
I am a critical of this concept because it grossly underestimates the risk of government action, such as if there is too high costs, that it creates a necessity for government to break the portfolio through any means, such as of forced devaluation.
Such as the superior (federal vs state vs county vs city) governments can destroy all existing laws that prevent housing supply from being kept made. They can levy taxes based on the square footage of property owned progressively to disincentivize excessive ownership. In the state of California, the state government is already reacting to the homeless crisis and coercing city governments to create practical plans to reach their new housing quotas.
Cities/municipalities control home ownership policies. They don't have to allow large amount of rental properties.
Cities that need tax revenue will ok apartment housing eagerly
Yeah but most cities have bought into the exit tax strategy. Every time you travel out of the city there is a tax. Like a toll.
City planners very much seek balance to housing strategies and so won't allow an imbalance of rental properties.
It's really quite amazing where we are at as a society in that regard.
I think it's because they realize single family houses are about the safest asset to buy. If stocks fall 30%, too bad sucks for the rich motherfuckers. If single family houses fall by 30% the government is pulling out \*ALL\* the stops to get them to go back up. We've been through this in 2009 and allowing prices to fall only creates a downward reinforcing cycle of people walking away and prices falling more. Combined with the fact that so much of our economy is tied to consumer spending. Increasing home price is essentially like heroin for consumer spending. Not only do consumers who own houses "feel" rich due to their increasing equity (which makes them spend WAAAAY more) but they also can refinance and pull out that equity to spend. Allowing housing prices to crash is basically like administering narcan - the party stops.
> If stocks fall 30%, too bad sucks for the rich motherfuckers. If single family houses fall by 30% the government is pulling out *ALL* the stops to get them to go back u
Didn't we just see the Fed and the government pull out all the stops after stocks fell last march 30% from covid?
Yeah just like in 09 when we crashed; all the evictions started, the government didnt bail out homeowners, they bailed out banks. The middle class ate it, and the poor ate it worse. Dont get your hopes up.
We did, though this was as much to protect the average American worker as it was the investing class
and to prevent the banks from exploding, they used covid as the excuse to ramp up the printers
But as the proportion of Americans who rent grows and eventually exceeds the number of homeowners the political calculus will change and protecting the interests of homeowners is likely to decline. There is already sporadic talk of getting rid of the mortgage interest deduction…
The mortgage interest deduction is essentially useless for me at least, after they raised the standard deduction.
Yup, it’s useless. It only helps on rentals as it is an expense to deduct from the rental income.
wealth also allows the extra money to wait it out until the stocks return.
Weeeeird metaphor but you've made your point
If single family houses fall by 30% the politicians will pat themselves on the back and take credit for solving the affordable housing crisis.
Indeed, God ain't making any more land so it's a Greta asset to buy and hold. The more the better since soon enough you'll be able to pick and choose who gets to build (and live) where
> a Greta asset
Uh oh, Freudian slip
> soon enough you'll be able to pick and choose who gets to build (and live) where
what do you mean by this part?
Seller's choose what offers to accept.
Does that mean the dutch are gods?
Yes. Fear them. Worship them. Abase yourselves before the Land-Makers.
A land value tax is the solution to this problem
Real Estate is a hedge against inflation.
And right now, with interest rates low, buying a house is attractive but other low risk investments are not.
Fuck these shitbags. Modern day serfdom. Real anti-American.
I have no idea what, but something should be done to restrict this.
I rarely advocate interfering in the markets but this is very worrying and a dangerous path to go down, mega corps forcing real people out of the market and into a perpetuaty of renting.
Side note 'you will own nothing and you will be happy', I wonder if Blackrock have any connections to the WEF?
Now who do you think control the people that allow and write the laws FOR this to happen?
Oh I totally get you, I'm sure a lot of the Blackrock managers are friends with congressmen, who are friends with the higher ups in all sorts of other organisations. Money talks and if someone gets offered some money or a big donation to their favourite charity, I'm sure it'll encourage them to vote a certain way..
Also it isn't a left-right issue, they're both at it just as much as the next.
I can’t wait to be renting my living pod from Amazon lol, when they’re one of like 4 providers of homes in the West.
Ugh yeah, guess I'll never own a house and will get the dubious privilege of paying someone else's mortgage until I die... haha... Christ.
I've been saying this since 2008. No one should be allowed to own a house they don't live in.
I would assume this is the QE loophole. QE money can only be used for select investments to keep it from leaking into the economy and causing inflation. Unfortunately, homes are investments, so the QE goes there.
I live in the dc metro region though. Everything is expensive, but housing prices are growing at a much faster rate than rentals, and honestly there's a glut of high end rentals. Why buy an overpriced shit hole when I can get a nicer luxury apartment in a prime area that I could live in for 20 years before it reached the cost of buying a place, let alone the interest, insurance, and taxes on buying a place?
It's diversification not to mention terms would matter greatly.
The business started with companies buying up homes on the cheap during the financial crisis in 09. Couldn't do anything with them, so started renting them out in the meantime.
Today, SFR is big business. At 6 or 7% cap rate, the returns are significantly higher than multifamily, where cap rates can dip below 5%, even in non-coastal markets. If you can achieve some sort of scale, you can drive operation costs down as well, so they have lower operating costs than the moms and pops buying up these homes. You can make good money buying up homes one by one, packaging them up, then selling to one of the big operators.
Source: worked for an asset manager running thousands of these homes.
They simply know the housing issues are not going to get any easier. Notice how almost all the housing articles that pop on feeds are about a "bubble"? Well, this isn't a a real bubble, and many people with cash now are trying to wait until it goes down. Thing is, it probably wont anytime soon.
It's an obvious easy investment for many groups with large amounts of excess capital. They are solid investment strategies for people who are scared of inflation eating away at their liquid reserves.
i mean housing issues can absolutely be solved.
there are artificial limits on building in many areas. there is artificial demand by dated work concepts that require people to show up in person.
usa has a huge land surplus to work with
Nothing you say is wrong.
You just underestimate the amount of cooperation needed to make this happen.
We are a little short of that these days.
> there is artificial demand by dated work concepts that require people to show up in person.
that will backfire in a spectacular way. you don't need to come to the office? okay, we will hire the person that speaks perfect English that lives in Chile for half the cost.
Except that was done for software, and it didnt go so well. You dont get the same quality control overseas. A lot of 3rd world countries like to hire American because of the reputations
What’s stopping them from hiring Americans that live in areas with half the COL and paying them half your salary?
If it worked, they'd do it. The fact that it hasnt been done yet tells me theres intangibles not being accounted for
It hasn’t been done yet because there’s never yet been something on this scale forcing tech companies to try WFH in the first place for whatever reason, be that corporate politics or the bureaucracy typical of large corporations.
Tech workers pushing for full WFH are telling companies ‘my physical presence has no bearing on my productivity.’ Why wouldn’t companies choose to pay people less in response to this? California comprises less than 1/8 of the US’ total population. Maybe they’d have issues finding replacements at the highest level, but as far as the average worker goes? Completely replaceable.
Have you tried hiring someone in tech? It's not easy to find good people, that's why the salaries are so high. At Microsoft we constantly had around 30% of team size open positions in our area and couldn't find enough good people to fill them.
You are basing that on 90s era outsourcing. Companies have learned from their mistakes and you have a ton of tasks that have been successfully outsourced. The leaders of the outsourced companies are largely Western Educated as well. You only hear the horror stories pf spectacular failures but it is being done very well
Yup. In practice, many of the best developers from India and China move to the US because of the higher pay.
I think people are too fixated on international outsourcing. Whenever people bring this up, there’s always a few people saying that international workers will never be able to replace them. What I see being much more common is Silicon Valley companies choosing to hire people in states like UT, WY, MT...
Native English speakers so no communication issues. Time zone is only an hour different so it’s just a normal workday for everybody involved. Cost of living is massively lower.
Tech workers pushing for full WFH are making a huge mistake and I’m more and more valuing the fact that my planned career is impossible to do remotely.
The issue is more so that the education systems in those countries are understandably pretty terrible and the lack of college and graduate level trained professionals.
There just aren’t as many PhD materials engineers or highly trained lawyers in Guatemala to justify building large offices there, and headquarters benefit from having the Chief Scientists nearby the head marketers, who then benefit from being near their marketing managers, who benefit from being nearby the business intelligence analysts, and so on.
Now that people are shifting to remote work, a lot of the data entry and process execution people will be outsourced to some degree, but that was already happening.
The higher level engineers, SME, and business managers with decades of experience and top notch education just can’t be as easily replaced by somebody in the Philippines.
I’m not saying people in developing countries are genetically less intelligent, but they generally don’t have the same education and background that people in developed countries have and are not equipped for higher level corporate and technical roles.
Also, you would be surprised at how accurate cognitive aptitude tests and educational attainment predict performance.
They aren’t perfect by any means and aren’t tied to genetic intelligence or g factor, but years of pre-K education in reading, writing, mathematics, and science through college really do begin to slowly build the brain’s ability to reason through problems.
Add up safe homes, educated parents, quality childhood-collegiate education, and proper nutrition and the difference in performance between an ‘unskilled’ (in the sense most of the actual ins and outs of the job are learned on the job) worker with a high school education from Chile and one with a bachelors degree in Canada are much larger than you would think.
They're not making a huge mistake, why wouldn't you want to live somewhere that suits you with a cheaper cost of living rather than in a city near your office where the cost of rent alone decimates your paycheck
Because salaries will also be much lower? Because it makes you easier to replace?
The thing is America has a shortage of skilled laborers and those jobs can't be outsourced and done from other places.
All I’m saying is that there are programmers good enough to work at Google or FB in states other than California, and they would likely be willing to work for lower salaries commensurate with their cost of living...
95% of these issues could be fixed by crushing NIMBYism to death. If only that were realistic.
Except you need materials to build homes and they have increased in price and seen shortages lately. Also look up construction worker shortage. You also need workers to build homes and yes it is hard to find workers now and this may not get easier with the aging population.
Well housing just now got to the levels of 2007 so I guess it is priced right. No one ever knows.
So are you saying that I’ll never be able to buy a damn house....
This is fucked and makes me depressed. The cost of housing is so insane and seeing multi billionaires snd corporations buy up all the housing to milk the poor out of more. I know this is about investing but I have morals and don't believe companies should be allowed to do this. There has to be more regulation.
Unless there is a riot, even then the Rent will Still Be Too Damn High.
Because they're playing all sides. Real estate ownership is becoming a luxury/status symbol. 30 years from now owning a single family home anywhere near anywhere anyone wants to live that also has work will be through inheritance or by the wealthy. Look at London for the long term path or Silicon Valley for the short. Silicon Valley today is Dallas in a few decades.
Just throwing this out there as food for thought. Does the drop in birthrate effect this? It seems like more families are having less than 2 children, and this will result in decline in population. Given that the living space demand is tied to population, would the decrease in demand cause issues 30 years from now?
Despite public opinion on the topic, immigration to the US is increasing. Most anyone, given the chance, would move to the US. That inherent advantage means any population crisis we have would have to be one born out of literal malice in the face of data
I know people will say that's the way things are looking, but I think people will see the writing on the walls at some point and realize we require either immigration surplus or widespread and institutional union/tariff/stricter immigration agreements to keep capital in the US. I'm sure you can guess which one people/corps prefer
That's a very good point and now it feels rather silly that I didn't factor in the immigration given that I myself am an immigrant.
> That inherent advantage means any population crisis we have would have to be one born out of literal malice in the face of data
I mean... if the last four years are any indication, this might not be that far fetched.
The population crisis is that most of the population is getting older and will not be working. It's not just America that has a worker shortage. Look up worker shortages and see about Europe and Australia and I think China has a shortage of manufacturer employees now too!
Astute. I only see a handful of things that stand in the way of the US continuing to be the most successful melting pot economy/power of all time: infrastructure, climate change, politics.
Infrastructure: Suburban areas are largely insolvent with current tax structures. Higher taxes may inhibit growth.
Climate Change: The "climate zone of prosperity" will likely shift tens of degrees towards the poles. Coastal cities (most productive and wealthy currently) risk annihilation via ocean.
I honestly will not be surprised if on my death bed after a full life (currently early 30s) I worry of my grandchildren's future in relation to Russia, China, and a resurgence of northern European nations. I will also not be surprised if my grandchildren or even children emigrate.
Cities will simply get dikes built around them if that becomes an issue. 500-1000 miles of dikes around a city like SF is doable, expensive, but compared to the losses? The rest could go under water, but most will be fine.
US taxes are basically the lowest in the world, with the highest % going to the military, so lots of growth potential on that one.
Politics is just politics, it's always the same. We're going through some rough times right now. It might go downhill by a large margin from here and get pretty grim, but it will eventually flip, possibly violently. Obviously higher taxes and lower military spending isn't going to happen unless things get wild for awhile.
> Climate Change: The "climate zone of prosperity" will likely shift tens of degrees towards the poles. Coastal cities (most productive and wealthy currently) risk annihilation via ocean.
It is fascinating that people unironically believe this. Amazing really
Already shipping through the arctic without ice breakers. That's huge for China, Korea, Russia, Canada, and Northern Europe. Remember BRIC? Notice how B&I arent doing as well as R&C? Sure, there are other factors, but fact is it's hard to prosper when it is too damn hot or too damn cold for most of the year.
Username checks out.
Check out Japan. They are a few steps ahead of us but have low immigration. It looks like rural areas are being abandoned but urban housing is still stable.
Japan is a completely different construct altogether. Their houses are meant to be torn down every few years.
People aren’t having kids because they can’t even afford a house because of student loans. Can’t afford kids or a house because of renting and loans. The whole system is a trap.
No one should take student loans just to go to a prestigious university.
I went to junior college and then to a state university.
I took a year off between and worked every summer.
I refused to take a penny of student loans.
Not sure what circles you frequent, but I'm 35 and all of my friends finished paying off loans, bought a house, and started having kids in the last couple years. Turns out about ten years after college, the ten year loan payments end.
I agree 100%. Also most people don’t want to do jobs that pay well at the expense of doing something they don’t want to do. They want to do something they love and want the six figure salary. The whole culture of working hard and elbow grease went out the window.
If your country breeds less they’ll import more. They can’t afford not to.
Maybe retirement communities will pop up more with the boomers retiring.
>Silicon Valley today is Dallas in a few decades.
Salaries in SV rise fast because companies there have huge growth opportunities. Dallas may be a fine place, but it isn't SV.
I specifically chose dallas because TX and CA are tied for Fortune 500 HQs and Dallas has names like AT&T, Texas Instruments, Jacobs, etc...
Yea, no. Dallas is cheap and will continue to be cheap property because they have minimal (nonexistent?) zoning laws, and an extraordinary amount of land to build into. West coast real estate has an ocean on one side and mountains on the other, limiting the amount of land to build, and massive NIMBY presence and restrictive zoning laws that keeps them from building up.
Dallas is cheap compared to California but prices are already skyrocketing here. It’s one of the fastest growing cities in the country and that growth is accelerating. There’s a lot of room to expand, but you can only build so far from the city before people don’t want to live there. Also you’re thinking of Houston with no zoning laws.
Yeah Houston where a typical walk down a commercial avenue will show in order, a strip club, a day care, a liquor store, a church and a gun dealer.
I am not American and out of the loop of the American real estate but why SV will be Dallas and not London?
He is saying Dallas will be like Silicon Valley. In terms of house prices, I think.
London is a very old city; SV is not, neither is Dallas. It took generations for London's residential real estate to have such high relative value. It took less than a single generation for SV's relative residential real estate value to fly out of control. Dallas, Tampa, Atlanta, Phoenix, etc... are likely to follow SV's trajectory. A residential real estate investor is not looking for the next London, they are looking for the next SV.
San Francisco Bay area, and particularly SV's, residential real estate is some of the highest value residential real estate in the country, if not the world. Comp home sales in SV are hundreds of percent higher than other major metro areas in the US. If you own a modest single family home in SV outright you are automatically a millionaire.
I understand now thanks.
London isn’t America. Most tech companies are in the USA. London is the center of finance, US is the center of tech.
New York city is the center of finance...
Yeah but London is a close second. Most banks have been using LIBOR for mortgages all this time. Anyways, my point wasn’t that London was superior to NY, it was that London already has its industry.
>30 years from now owning a single family home anywhere near anywhere anyone wants to live that also has work will be through inheritance or by the wealthy
It really depends. We could see another crash in housing prices, policy changes that raise incomes directly or indirectly (like higher minimum wages, universal health care, child care subsidies, lower higher education costs), a surfeit of housing because we overbuild in response to the COVID squeeze, etc.
All or even most of these things happening is unlikely, but people do vote and policies do change.
I dont disagree but am not holding my breath for a drop. Maybe some cooling makets and sideways action. People think residential is crazy...as someone who has looked at a couple hundred thousand square feet of light industrial I am wishing I had mortgaged a derelict warehouse a few years ago. Talk about leverage and green, phallic "medical devices"...
Because housing is seen as an investment and not a necessity for families. Without governmental intervention, nothing can stop them.
real estate investors actually get better tax treatment (such as hoa and depreciation writeoffs) than owner occupied. something is seriously wrong with that. investors should be taxed higher / disincentivized.
but who's making and voting the laws? probably the real estate investors.
Owner-occupied gets to write off $250k of capital gains and they get homestead exemptions on property tax, that's way better than what investors get
investors can shelter all capital gains if it's a rental and they re-invest the gains into another rental... also property tax on rentals is fully deductible, for homeowners only 10k is. interest on your primary residence is only deductible up to the first 750k if you bought a house after 2017, 1mil if you bought it before. interest on a rental is fully deductible.
note these were all tax burdens introduced by the Tax Cuts and JOBS Act in 2017 to make it less attractive to buy a home, more attractive to own investment real estate.
I honestly hope they get burned doing this. Destroying the dream for millions of people.
Tinfoil hat long play
To start I think this theory is way out in left field and probably has zero to do with the actual situation but I find it interesting. I think the real answer is historically low yields in fixed income but...
There is a push to outlaw new single family development (in some places this looks more like allowing condo/apartment development on all remaining single family zoned properties).
If you're a one of these larger funds that thinks on the scale of a hundred years vs a couple decades for most individual investors. Single family detached homes could be a very lucrative investment on these time frames.
The return of feudal society and fiefdoms, except with large investment banks standing in for kings and the aristocracy.
So young people can't buy them.
Frankly, it should be illegal for investment firms to buy single family homes.
I totally agree. And I'm usually fairly lessaiz faire but this is disgusting and possibly a dangerous path to go down. How can small families compete with multi billion dollar companies?
Exactly. These are places for people to live, to raise families, to build relationships, etc and rent seeking parasites need not apply.
Blackrock receives a fuckton of money from the Fed to which they’re probably using to buy out America through real estate: https://www.counterpunch.org/2020/06/05/blackrock-is-bailing-out-its-etfs-with-fed-money-and-taxpayers-eating-losses-its-also-the-sole-manager-for-335-billion-of-federal-employees-retirement-funds/
It should be and even the average person should be limited to a house and a vacation home, no rentals. Destroy the commercial single family home market and get people cheap homes that they can afford to maintain.
Then it should be illegal for foreign nationals like Chinese to come buy up American real estate.
Z-estimate for my house is 515k-610k. Redfin says $536k.
Appraisal for recent refi: $535k
Redfin cash offer: $575k
Bought it for way above asking when I was exasperated 2 years ago, $465k
I’ve seen this article posted like 40 times in the last two days on every sub.
To rent them to everyone that can no longer afford to buy them would be my guess.
You will own nothing and be happy - The Great Reset
The 1% are destroying the lower and middle class by removing the largest generational wealth building tool - the family home. Creating the perpetual renter and stopping upward mobility for the masses. Same with the destruction of small businesses, they are removing the flexibility that independence offers. Must take the jab if you cannot get a job without one because they are all mass corporations. Must remain silent to keep your social credit score up or no one will rent to you and you will be homeless. It's all power and control of the resources.
Although housing prices are inflated all over there are huge, huge swaths of the US where housing is downright cheap even after the recent market uptick. Are they NYC or LA? No. But there are still thousands upon thousands of opportunities to purchase housing to live in or as a mom-and-pop investor.
But is there work that matches the skill levels available in these areas. Assuming median income of an area like NYC and LA is roughly 2-3 times that of a region in South Dakota, is there enough work for a NYer to move to SD? What about the people already there? They will be unable to buy houses because competing against those with more assets coming in. Check out the FL mkt, their prices are booming from the Blue state exodus and FL peeps are complaining about the housing jump. New peeps will create their own businesses of course.... if they can but it will squeeze the job market for awhile first.
Underrated comment. We need a French Revolution.
Tree of liberty must be watered often
Keep residential markets residential and commercial markets commercial. Stay in your lane
Single family homes have a great ROI when rented out with airbnb.
*in an area with demand for short term rentals.
Because they are awash in cash. Just like the banks. They're not overpaying, they're underpaying. They know all this cash is just burning up because it just keeps coming. It's all worthless fiat. Keeping it instead of buying hard assets would be foolish.
Yes. The money is totally worthless. They're changing it into something worthwhile before people realise.
This also means debt will mean nothing either! So with inflation, you fixed interest rate loans will be worth less too.
This is not true, blackrock still has and will still keep increasing the amount of cash on their balance sheet. Cash isn't getting debased as fast as you think as you think, yes inflation is definitely here but it's nowhere near enough for firms to just buy up assets because of inflation.
This is just a hedge. They have an ungodly amount of money, these real estate purchases are nothing, pocket change
Also, they don't have to pay mortgages, which effectively means that if they mortgage out these properties (which they won't) they could still make 100k cheeky interest by doing naff all
I think they (Rich MFers) are still getting a great deal on these homes.
Imagine if you or I buy a home - we pay $300K for the home and get a great rate - like 2.5%
We end up paying $420K for that home over the life of a 30 year mortgage\*(accounting for interest).
On the contrary - let's say Blackrock has a billion dollars - and they go buy the same home for $300K - they Pay $300K!
No interest - maybe they even can negotiate the price significantly lower since they don't have to deal with a mortgage lender, can pay cash, AND they probably have realtors on staff which significantly reduces their closing costs, etc - other fees.
\- Just that part there gives them a significant advantage over the average home buyer - they can buy a dozen \*(or a hundred) homes. the average person can barely afford one.
\- once they buy a dozen (or a hundred) homes - they can then set the market by refusing to sell for a reasonable price - and charge $$$ more than they paid for the home for the future buyer who wants the home. They force up the cost of real estate, and all their other properties go up in value.
The future is corporate ownership of all housing while all individuals are renters, unless we do something to stop it.
Seems easy to answer .....Safe houses.
JK, probably because they think the location will be valuable in the near future. Hedge Funds operate a little differently than regular investment businesses. They can buy everything from stocks to Art. I wonder if they own any Pokemon Cards?
Physical assets become the most valuable assets as inflation grows
I had read that these companies looked at suburban cities with good schools where the income to rent ratio was high. I.e. the tenants can afford to pay more in rent. The companies basically went in and bought up multiple properties in a single neighborhood then doubled the rent. The argument was the tenants didn't want to leave because they liked the schools and could also afford the rent.
Tl;dr - These companies were basically driving up rental prices in suburban neighborhoods.
There's a housing shortage believe it or not.
Affordable* housing shortage.
Then we should be building more, China-style
This is being done with taxpayer money. Blackrock and Goldman are the eyes and ears of the Fed when it comes to setting market rates and recovery. It’s beyond conflict of interest.
[Rent-seeking behavior](https://www.google.com/search?q=rent+seeking+behavior&oq=rent+seek&aqs=chrome.1.0i433j0l2j69i57j0l6.2114j0j9&sourceid=chrome&ie=UTF-8) is literally a sign of predatory capitalism.
To compete with the Chinese who have basically cornered the US housing market.
In my opinion, this can be used as a hedge to other investments. They could be worried that the stock market is overvalued and do not want to over leverage themselves into stocks, so they diversify into housing.
Maybe they’re expecting very high inflation rates. High enough rates to justify the 20% over asking prices that they’re paying because inflation will drive up the prices of hard assets
hedges against the impending economic disaster.
They can control the price of entire neighborhoods by holding homes hostage for a certain over valued price after the crash. Essentially keeping the value of their wealth before the cash.
Glad I came by this post... I was thinking of selling my rental property but suppose I'll keep it for at least a bit longer :)
I know a few people that started selling there personal homes and even moving into apartments instead.
The great reset. So they can control the middle class and lower middle class. Scary shit.
To make more money and fuck the little guy. Duh
Running out of "alternative investments"? BRK has its own real estate housing arm too.
Bonds have the lowest risk and the lowest return. Property has medium risk and medium return. Stocks have the highest risk and highest return. Usually when you are young you own more stocks because you can afford to take on more risk. When you are old, you can't risk losing half your money in a market crash right before retirement. So you buy less risky investments that pay less money.
Blackrock and many other firms manage people's pensions and retirement accounts. Normally they would put a bunch of money in bonds. But bonds pay next to nothing these days. So the two options are to either stay in less risky investments and get less money. Or buy more risky assets and get more money. They've decided to go for more risky assets like single family homes instead of bonds. But they don't want to go too risky by buying stocks.
Because they and the rest of the financial sector are parasites.
I cant wait for DeFi mortgages and other cheaper alternatives.
How would you anticipate this improving things?
One of the issues is that cash buyers of houses can pay the exact amount - i.e. 400k for the property.
The traditional mortgage is a complete rip off and house buyers end up paying 500k for the same house.
With DeFi and alternative ways of financing mortgages and cutting out the trad banks, we should be paying much much lower. This would even up the playing field for buyers.
With online mortgage advisers, cutting out lawyers with cheap online services and cheaper conveyancing, you can reduce the fees too.
I don't think there is any hidden information here. When you get to the size of Blackrock (and Blackrock is truly beyond huge), you really are investing all over the place just to hedge against almost everything. Housing is something like a 1/3rd of developed country wealth so it's a weird area of the economy to ignore. Everyday people like you and me might invest in a REIT to get in on real estate, but Blackrock is big enough to cut out these middle men and just start buying directly.
I think the shift, which has been happening for a while, is a lot more of the housing stock being rented out rather than bought to live in. I predict most cities are going to start seeing suburbs built entirely for rent, funded by big financial institutions.
Same thing in Uk. Lloyds bank jumping on the property market.
Because the capitalist system wants to make sure that home ownership is out of reach for most millennials and zoomers
Does anyone posting here realize that just 9 years ago in 2012, you couldn’t sell a home? My point is that things change and people that cannot buy now will still get a shot.
Because hyperinflation is going to skyrocket prices in a long-term growth asset. It's the same reasoning why big pension funds are investing in major revenue-generating infrastructure projects.