Anyone seen Blackrock impact on housing and which areas?

115 Replies

I read an article that Blackrock is buying all the houses and new housing tracts with taxpayer dollars to the tune of over 30k houses per year. Turning them into SFR. They are buying above market. Anyone else know about this situation or have firsthand knowledge of the impact?

I've seen this discussion going around on the forums and the Facebook page. I read through several threads and all I come away with is to wonder why anyone cares. There's enough to go around. I've had more opportunities than I have money to capitalize on.

Sure, it's possible Blackrock's behaviors are hyperinflating the market, but we're not chasing retail as investors, and if anything, the inflated real estate prices make our portfolios read more robustly. As I see it now, the only reason to even think about Blackrock is to provide some excuse for why a person can blame someone or some business for their inaction.

Originally posted by @Jon Greer:

I read an article that Blackrock is buying all the houses and new housing tracts with taxpayer dollars to the tune of over 30k houses per year. Turning them into SFR. They are buying above market. Anyone else know about this situation or have firsthand knowledge of the impact?

Do you have a link to the article stating BLK is using taxpayer dollars to make these purchases?

I haven't heard of Blackrock using taxpayer money for their purchases; however, I am a commercial real estate lender for a top 10 bank.  We have seen a HUGE amount of capital flowing into single family rental projects.  It's not just Blackrock.  Most of the major institutional equity funds, national real estate owners and developers, and finance companies are focused on this space.  The major difference for these players is that they are focused on developing and owning entire communities of single-family homes that are built specifically for rental purposes.  Essentially, they are building horizontal multifamily projects.  There are some companies dedicating capital to purchasing scatter-site portfolios of individual houses, but this strategy seems to be the exception.  Large institutional players have billions of dollars to deploy, and they cannot do so effectively by targeting single homes in random locations in your local area, so I wouldn't worry about them gobbling up existing inventory.  Where you will see an impact is competition for renters.  That said, the institutional focus in on building these projects where land is cheaper and horizontal development makes more sense.  If you are in a moderately developed area, you likely will not see this product.  Happy to discuss further for anyone that is interested.

@Jody Sperling interesting perspective. Sounds like your take is that it helps you possibly. I take a pretty broad approach to this and consider the implications for the hard working people of our country. You may not be chasing market, but others are confined to their market and don’t understand how to find a good deal. Blackrock turns out to be the largest asset manager in the world apparently, and is buying with other institutions 1/4 of the inventory in places like Houston TX. Seems significant they are after the state everyone is moving to looking for freedom.

@Tony Kim I don’t know how to post a link here, however, if you duckduckgo “ Blackrock buying all the housing” you’ll find multiple articles. My favorite comes from Revolver news from June 9th. If you type “revolver Blackrock” it will surface. This articles says they are getting funding from the Federal Reserve and are redistributing like 130 trillion or some stupid number as part of the great reset. Man this is great!

@Mike Hillman as you stated, they have billions to deploy. What keeps them from going after houses everywhere? They most certainly are capable of doing so. I worked for a company called Citivest in Southern CA for a little while as we were crawling out of the recession. They were purchasing bundles of housing without seeing them, then sending in managers to oversee little remodel crews and flipping around houses all over the place, even off dirt roads. So the word on the article I found off Revolver news from June 9th (a link) says they are somehow fused by the Federal Reserve. Not sure how printing money is directly related, but apparently they are getting something to help redistribute “wealth” and reset something.

@Stephen Bradford well it’s frustrating and I think people have a hard time understanding why it should be illegal, unless they follow the path of history, the truth and reason to where it leads. The corporations become a wing of the government (not really gov. at all) to carry out a time of enslaving people as an exercise of evil over man kind, as a battle over life, liberty and the pursuit of happiness! One side of the people thinks about how they can do as well for themselves within this rollout of corporate wealth transfer, and the other side considers how to root this process out and stop it. But we all know it’s been happening for years, just accelerating now to see if they can finally have power like China to say you can only have one child etc.

@Account Closed My answer to your first question is that I know of no legal reason that prevents private equity funds from going after houses everywhere, but there are some economic barriers.  Blackrock and other similar fund managers are investing money on behalf of others (typically institutions like state employees retirement plans and university endowments, etc.), and they are seeking the best yield they can find.  These funds seek to deploy capital in the most efficient way possible because it improves yield.  For this reason, they prefer to purchase large commercial properties.  As an example, a 300 unit apartment complex is more cost effective to manage than 300 rental houses scattered across any given area.  I suppose it's possible that technology improvements could improve efficiency of disparate asset management; however, there will still be inefficiency imbedded in scattered unit ownership because each unit will have a unique cost structure.

With respect to your prior experience with Citivest, I am not familiar with that firm, so I cannot comment on its business plan; however, I was managing a large portfolio of REO for a large regional bank on the east coast during the Great Recession. At that time, the country was flooded with housing units and completed lots (unlike today), and when the music stopped, there were few individual buyers. That created a buying opportunity for investment firms, who purchased partially completed developments for pennies on the dollar. They finished partially completed homes and built new homes on completed lots for the purpose of renting them out. Most of the cases I saw involved institutions buying whole neighborhoods, not scattered individual houses, so the concept was similar to my original post.


As far as printing money goes, the fear is that all of the stimulus in the economy has nowhere to go (i.e. there is no increase in production to offset the new money supply), and the result will be asset price inflation.  I'm not an economist, but I believe there is some truth to this argument.  World governments have been handing out stimulus for years, but the world hasn't seen large increases in productivity or new products.  As a result, the money gets spent and ends up aggregated in the hands of large corporate interests or goes into savings.  

One final point to share, and this is only my opinion, so take it for what it's worth.  Many of the articles paint Blackrock and other similar firms as evil for buying homes and robbing individuals of the opportunity for wealth creation, but if private equity funds are buying and renting homes, they are engaging in similar behavior to many individual landlords, just at larger scale.  Who among us would not build the biggest, most profitable portfolio of rental houses if we could?  Does that make us bad people?  I would also point out that private equity funds are investing on behalf of others.  Although not exclusively the case, the investors in private equity funds typically consist of public and private pensions, so the beneficiaries of these investments are teachers, police, firefighters, etc.

Originally posted by @Stephen Bradford:

It’s wealth redistribution. But from the lower and middle class to the very wealthy. They’re taking away all these houses that could be someone’s starter home, something that could build equity and generational wealth, but instead they’re being gobbled up by multi billion dollar banks and corporations who buy up a whole neighborhood, pay $50-$100K over asking and shut out all the people who want to buy them. Instead they’re being turned into a giant money pit that will just keep people trapped in a cycle where they never are able to save up for a home or their own, they become renters forever. Actually they become peasants, at the mercy of the new landed gentry


this crap needs to be illegal.

while they maybe buying a lot of property and they are  they are not paying 50 to 100k over fair market value they did not get to become billion dollar concerns paying that far over retail for a product. 

@Mike Hillman   I think this has been  a progression as well many of these hedge funds entered the C D space because of super low price points only to fall into the same trap private non local investors fall into.. those props are tough.

so they moved up the food chain buying nicer product and as stated buying entire housing developments. And this only works in specific markets were dirt is very cheap and vertical is still cheap compared to many other areas of the country..  The numbers still have to work for them they need a positive cap rate.. or return..

So like for my new construction product I have never sold a home to an investor out of 300 homes i built in the last 10 years or so.  Numbers dont work 500k home for 2200.00 rent.  but the 200k home for 1600 to 1700 that will work .. And what I pay just for land and permits you can build an entire home for in many markets think FLA TX GA 

Originally posted by @Nicholas L. :

@Account Closed from my reading, this phenomenon is very market / city specific.  There are cities / markets where a significant portion of the rentals are owned by institutional investors, and there are entire states where they don't own a single property.

https://www.vox.com/22524829/w...

EXACTLY  price to rent ratios still have to work. 

Originally posted by @Mike Hillman :

@Account Closed My answer to your first question is that I know of no legal reason that prevents private equity funds from going after houses everywhere, but there are some economic barriers.  Blackrock and other similar fund managers are investing money on behalf of others (typically institutions like state employees retirement plans and university endowments, etc.), and they are seeking the best yield they can find.  These funds seek to deploy capital in the most efficient way possible because it improves yield.  For this reason, they prefer to purchase large commercial properties.  As an example, a 300 unit apartment complex is more cost effective to manage than 300 rental houses scattered across any given area.  I suppose it's possible that technology improvements could improve efficiency of disparate asset management; however, there will still be inefficiency imbedded in scattered unit ownership because each unit will have a unique cost structure.

With respect to your prior experience with Citivest, I am not familiar with that firm, so I cannot comment on its business plan; however, I was managing a large portfolio of REO for a large regional bank on the east coast during the Great Recession. At that time, the country was flooded with housing units and completed lots (unlike today), and when the music stopped, there were few individual buyers. That created a buying opportunity for investment firms, who purchased partially completed developments for pennies on the dollar. They finished partially completed homes and built new homes on completed lots for the purpose of renting them out. Most of the cases I saw involved institutions buying whole neighborhoods, not scattered individual houses, so the concept was similar to my original post.


As far as printing money goes, the fear is that all of the stimulus in the economy has nowhere to go (i.e. there is no increase in production to offset the new money supply), and the result will be asset price inflation.  I'm not an economist, but I believe there is some truth to this argument.  World governments have been handing out stimulus for years, but the world hasn't seen large increases in productivity or new products.  As a result, the money gets spent and ends up aggregated in the hands of large corporate interests or goes into savings.  

One final point to share, and this is only my opinion, so take it for what it's worth.  Many of the articles paint Blackrock and other similar firms as evil for buying homes and robbing individuals of the opportunity for wealth creation, but if private equity funds are buying and renting homes, they are engaging in similar behavior to many individual landlords, just at larger scale.  Who among us would not build the biggest, most profitable portfolio of rental houses if we could?  Does that make us bad people?  I would also point out that private equity funds are investing on behalf of others.  Although not exclusively the case, the investors in private equity funds typically consist of public and private pensions, so the beneficiaries of these investments are teachers, police, firefighters, etc.

Mike, thanks for injecting a lot of sense into this thread that could have easily derailed into something less pleasant. There are hundreds of asset managers that are buying up homes......they are just acting as fiduciaries for their clients and investing where they see fit. I read that WSJ article when it first came out and I'm not really sure why BLK is being singled out...because AM's have been doing this for a very long time. Roof Stock was also singled out.  It's ridiculous.

It is trendy to hate corporations, but the majority of the equity in these companies is owned by individuals, retirement funds, government pensions, mutual funds, insurance companies, etc. It is true that many poorer Americans don't have this type of ownership, but they vote for politicians who promise them handouts. They are basically paid off and in the process they are held in poverty. The politicians are in the pocket of the corporations, so they are paid off too. Either directly or through enrichment of their families.

Maybe BlackStone is buying houses in volume, but there are lots of people with money buying houses. That doesn't mean the average person can't do the same. There are two ways to look at this: 

1. You can follow BlackStone into the markets they invest in. They are likely to drive up values and you can enjoy the ride up with them. Being small can even give you a competitive advantage through service specialty experiences. 

2. You can take a contrarian approach and look for untapped markets where BlackStone or other large players don't exist. Arrive in a market before them or play in smaller markets that don't interest them.

I see a bigger threat from the technology companies, because they are controlling information. They have the power to limit free speech, focus advertising to control thought and they collect massive amounts of personal information. They also have the lobbying power to buy and control politicians, which means nothing changes. The senate holds some hearings to make it look like they are doing something, but nothing happens.

Another threat I see is when these hedge funds participate in manipulating the stock market. Driving prices up or down, short selling and high frequency trading, which is just skimming wealth off the market. None of these practices add any value to the economy. At least in the case of BlackRock buying houses, they are providing something of value - a place for people to live.

Originally posted by @Stephen Bradford:

It’s wealth redistribution. But from the lower and middle class to the very wealthy. They’re taking away all these houses that could be someone’s starter home, something that could build equity and generational wealth, but instead they’re being gobbled up by multi billion dollar banks and corporations who buy up a whole neighborhood, pay $50-$100K over asking and shut out all the people who want to buy them. Instead they’re being turned into a giant money pit that will just keep people trapped in a cycle where they never are able to save up for a home or their own, they become renters forever. Actually they become peasants, at the mercy of the new landed gentry


this crap needs to be illegal. 

Should be illegal to overpay for a house?   Or buy more than x a year?  What about the benefit the people who SELL to BlackRock over market get?  What about the people who don't sell to BR, but who now can sell for MORE because of the BR comp?  Or refi and pull out extra money because of the comp?

Are some people effected negatively due to BR paying over market?   Yeah.  But the same # are helped. 

Same with my buying multifamily:  I hate that all these people from out of state are paying dumb prices in Houston.  It makes all the stuff I want to buy way more.  But the flipside is I've been able to refinance at stupid high values to buy opportunistically.  I've also been able to sell to some of these people.

You have to take the good with the bad. 

They are a huge reason for the increase in housing prices over the last ~18 months. They are pricing regular buyers out of markets everywhere.  It goes like this: 1) Cash buyer offer, willing to pay 10% or more above listing and above appraised value. 2) Comparables in the neighborhood rise, more sellers list at even higher prices. 3) Repeat cycle.  

In the Sacramento region, these same investors started out back in 2008 after the bubble burst and picked up properties at a discount. Before the current market, they owned over 10% of SFR in the region and that was enough to control the rental market. Rents were already crazy expensive, and now they will be worse PLUS ordinary people struggle even more to become homeowners. Traditional investors are also being priced out. The entire conversation about 'we need more affordable housing' can be attributed to the influence of these global institutions. What is their intent? Why do they need to own all of the real estate and control the market?

@Jon Greer You might want to check the voracity of your news sources. Quick google search on blackrock buying homes only turned up “fringe” news sources. Revolver is a highly biased right wing media outlet. The BR connection to the Fed is even more dubious.