Home sales volume is up. Home prices are up. The percent of people who say they want to buy a house is up. Homebuilder stocks are up. New home sales are up. New home construction is up. All of these trends have been duly noted and discussed in my previous posts throughout 2012.
Well, here is another indication of strength in the single-family market.
Wall Street whales are now swallowing up plankton (houses) in massive quantities. The biggest of the big money is now foraging across America. Here are some excerpts from a Dec. 9 CNBC report.
“A flurry of private-equity giants and hedge funds has spent billions of dollars to buy thousands of foreclosed single-family homes. They are purchasing them on the cheap through bank auctions, multiple listing services, short sales and bulk purchases . . . with plans to fix up the properties, rent them out and watch their values soar as the industry rebounds.”
The Blackstone Group is reported to have purchased 6,500 houses in 2012. Blackstone is a huge asset manager, with more than $205 billion in assets under their control. Colony Capital Group has bought 4,000 homes. Silver Bay Realty Trust reportedly has purchased 2,200 houses.
Somebody is going to have to manage these properties. In communities where these giants acquire a sizable number of houses, local real estate professionals will be needed to oversee the repair of the properties and find tenants to fill them. This will be a large-scale property management undertaking.
It’s one thing to talk about how the housing market may be turning the corner. These financial giants are talking with their cash.
This is just another of many reasons why I’m bullish on the single-family housing market in the years to come.
– Mark Dotzour
Texas A&M University Real Estate Center