The Housing Market Just Went Negative

Lets discuss the story that BlackRock is purchasing entire neighborhoods for 20-50% over asking, funded by the federal reserve, and using your tax dollars to buy real estate – Enjoy! Add me on Instagram: GPStephan

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Here are my thoughts on the current state of the housing market, housing inventory, and the future of the real estate market in 2021.

So, basically…here’s what’s actually going on.

It’s understandable that people are ANGRY, and it’s easy to blame a faceless, nameless wall street corporation as the root cause…but, truth be told…you want to know who’s driving up the housing prices? It’s literally EVERYONE looking to buy a house, incentive to own real estate because interest rates are really, really cheap. That’s it.

Think about it RATIONALLY…for a giant company like BlackRock, taking the time to compete with 20 offers in random residential neighborhoods across the country would be logistical nightmare. For them, it DOESN’T MAKE SENSE, and in order to make a profit – they need to operate within the economy of scale, and have the infrastructure already setup and running in order to make offers, keep properties leased, and make repairs. They aren’t sending handymen out from city to city fixing leaky sinks…

Instead, institutional investors are WAY more likely to DEVELOP THEIR OWN subdivisions IN SCALE, PURPOSELY BUILT to be rented out as a long term investment. This way, they keep the profit margins to themselves, they pay significantly less than it would cost to build each home individually across the US, and they can maintain quality control from start to finish. If anything, they’re HELPING add more inventory to the market, and taken AWAY the burden of a housing shortage that’s plaguing the entire country.

The Urban Institute also argued that “there really isn’t any evidence in our research that institutional investors led to higher rents or greater eviction rates for our sample of counties tracked through the recovery.” meaning…institutional buyers are NOT the ones responsible for the current state of the housing market.

I would bet that, instead…it’s every day, ordinary home buyers who are paying over asking because they want to lock in a rate, knowing that – historically – real estate does well if inflation begins to increase.

ALL SOURCES:

Fundrise Buying The Neighborhood For $32 Million Dollars:
https://fundrise.com/investor-update/518/view

Financial Samurai Article:
https://www.financialsamurai.com/institutional-real-estate-investors/

Investor Sales:
https://www.marketplace.org/2021/04/13/institutional-investors-are-stiff-competition-homebuyers/
https://www.realestateconsulting.com/the-light-200-companies-revolutionizing-housing/

2018 & 2019 Housing Report:
https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/

The Impact Of Single Family Home Buying:
https://ideas.repec.org/a/gam/jsoctx/v8y2018i4p93-d171162.html

CoreLogic Survey:
https://www.corelogic.com/intelligence/special-report-investor-home-buying/

Federal Reserve Survey:
https://www.federalreserve.gov/econresdata/feds/2015/files/2015084pap.pdf

Redfin On Cash Buyers:
https://www.redfin.com/news/all-cash-home-purchases-smallest-share-since-2007/

Institutional Buyers:
https://www.rentalhomecouncil.org/wp-content/uploads/2021/04/SFR-Get-the-Facts.pdf

BlackRock on Federal Reserve:
https://www.reuters.com/article/uk-usa-fed-blackrock/blackrock-conflicts-managed-extremely-carefully-feds-powell-says-idUKKCN24U38E?edition-redirect=in

New Housing Stats:
https://fred.stlouisfed.org/series/RHORUSQ156N

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For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at [email protected]

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