From Michael Orr of the Cromford Report:
“There have been few topics as subject to wildly untrue reporting as the institutional investment in single family homes. I noted an interesting post in the Blackstone Blog two days ago that I think addresses some of the popular misconceptions about the situation and I commend it to you. Blackstone makes the following points:
Blackstone is not buying houses in sufficient number to make an overall difference in house prices.
29,000 homes owned out of 115,000,000 housing units in existence in the USA
25,000 homes acquired in the last 12 months out of 5,600,000 purchases
( I would add – about 3,000 homes owned in Maricopa County out of about 1,700,000 housing units)
Blackstone operates in only 13 out of 300 metro areas..
Prices are rising simply because the country has not built enough homes.
The USA has added only 700,000 homes over the last 4 years
Population growth and obsolescence require 1,500,000 homes to be added per year to meet demand
Home prices still lag behind long term trends
Still 22% below the long-term price trend from 1951-1999
These are factual points that I agree with, simply because they are true.
In contrast I believe the editorial in the New York Times on June 8 shows that the Editorial Board fails to understand the true realities of the current housing market, and most of the conclusions drawn are incorrect.
Unfortunately people who read the New York Times vastly outnumber the people who read the Blackstone Blog, so the facts will once again lose out.
The institutional investor myth is starting to replace the shadow inventory myth. Both sound plausible but have been wildly exaggerated out of all proportion to their real impact. Neither will have a significant lasting effect on the overall Greater Phoenix housing market. The tiny numbers involved sound large to the uninformed, but in fact they are swamped and made irrelevant by the huge size of the normal market. This is obvious to people like us who spend our lives actually counting homes, but no doubt this new myth will linger on for several years just as the shadow inventory has.â€