While not all that is said is true, not all that is truth is told.
Wall Street hedge funds have quietly amassed an unprecedented rental empire. Deep-pocketed investors have bought more than 200,000 cheap, mostly foreclosed houses in cities hardest hit by the meltdown. Since Oct. 2012, gargantuan Blackstone Group (at a spending rate of $100 million a week) has grabbed houses the same way a regular person might stock up on toilet paper from Costco. It recently announced plans to take the business international, beginning in foreclosure-ravaged Spain. Nov. 26, 2013.Institute for Public Accuracy. IPA
Is Wall Street Buying Up Houses Leading to Another Bubble?
Author of A Dream Foreclosed: Black America and the Fight for a Place to Call Home, Laura Gottesdiener wrote the piece “The Empire Strikes Back, How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme — Again,” which states: “You can hardly turn on the television or open a newspaper without hearing about the nation’s impressive, much celebrated housing recovery. Home prices are rising! New construction has started! The crisis is over! Yet beneath the fanfare, a whole new get-rich-quick scheme is brewing.
“Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire, snapping up Queen Anne Victorians in Atlanta, brick-faced bungalows in Chicago, Spanish revivals in Phoenix. In total, these deep-pocketed investors have bought more than 200,000 cheap, mostly foreclosed houses in cities hardest hit by the economic meltdown.
“Wall Street’s foreclosure crisis, which began in late 2007 and forced more than 10 million people from their homes, has created a paradoxical problem. Millions of evicted Americans need a safe place to live, even as millions of vacant, bank-owned houses are blighting neighborhoods and spurring a rise in crime. Lucky for us, Wall Street has devised a solution: It’s going to rent these foreclosed houses back to us. In the process, it’s devised a new form of securitization that could cause this whole plan to blow up — again.
“Since the buying frenzy began, no company has picked up more houses than the Blackstone Group, the largest private equity firm in the world. Using a subsidiary company, Invitation Homes, Blackstone has grabbed houses at foreclosure auctions, through local brokers, and in bulk purchases directly from banks the same way a regular person might stock up on toilet paper from Costco.
“In one move, it bought 1,400 houses in Atlanta in a single day. As of November, Blackstone had spent $7.5 billion to buy 40,000 mostly foreclosed houses across the country. That’s a spending rate of $100 million a week since October 2012. It recently announced plans to take the business international, beginning in foreclosure-ravaged Spain. …
“Last year, Mark Alston, a real estate broker in Los Angeles, began noticing something strange happening. Home prices were rising. And they were rising fast — up 20 percent between October 2012 and the same month this year. In a normal market, rising home prices would mean increased demand from homebuyers. But here was the unnerving thing: the homeownership rate was dropping, the first sign for Alston that the market was somehow out of whack. …”
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