Business & Finance BlackRock attempting to monopolize housing

[Bassoe]

wall street journal article
the atlantic article
new york times article
bloomberg article

To elaborate, massive investment firm BlackRock, after receiving a bailout of our taxpayer money, is attempting to convert the money into inflation-resistant assets, specifically, housing, by buying housing for far above its actual cost, and why wouldn't they, it isn't their money they're spending, so that they can price home ownership beyond the capacities of any but the wealthiest and reduce the majority of the population to rent-serfs.

 

[Abhorsen]

They have nowhere near enough capital to get anywhere near a monopoly. If they were only buying in and around one city, maybe, but that's about it.

This is just another story of a firm betting a lot on something.

 

[Rocinante]

So they're using our money to buy our houses so that we can't.

Lovely.

 

[ParadiseLost]

What we really need is stricter rules on home ownership and institutional investment in homes in America.

 

[Arlos]

When investment funds are looking for bolthole, you know stuff is about to go down.

 

[Bacle]

When investment funds are looking for bolthole, you know stuff is about to go down.

This isn't a bolthole, it's strategic acquisitions.

The want to raise housing prices to the point plebs cannot buy them themselves, and force many neighborhoods to be all single family rents.

Homeownership is a key part of upward social mobility; removing a lot of homes from the market makes that harder for people to achieve, while create large income streams for the firms via renta serfs.

 

[Rocinante]

This isn't a bolthole, it's strategic acquisitions.

The want to raise housing prices to the point plebs cannot buy them themselves, and force many neighborhoods to be all single family rents.

Homeownership is a key part of upward social mobility; removing a lot of homes from the market makes that harder for people to achieve, while create large income streams for the firms via renta serfs.

Yes. They don't want a middle or upper middle class.

They want an ultra rich class and a class of serfs.

 

[Zachowon]

This isn't a bolthole, it's strategic acquisitions.

The want to raise housing prices to the point plebs cannot buy them themselves, and force many neighborhoods to be all single family rents.

Homeownership is a key part of upward social mobility; removing a lot of homes from the market makes that harder for people to achieve, while create large income streams for the firms via renta serfs.

Where is this happening? Because there are ways to nit have to worry

 

[Abhorsen]

What we really need is stricter rules on home ownership and institutional investment in homes in America.

No, we need the opposite. The only reason there is a housing shortage in parts of America is that those parts have stupid godforsaken rules about new buildings, stopping housing from increasing. These are also very liberal places (see: NYC, LA, SF).

Houston, which has next to no zoning laws? Not an issue.

All the rampant buying will do in a healthy market is encourage more homebuilding, bringing the price back down. That's what's happening in Huntsville, where I live. There's a new building project practically everywhere.

The want to raise housing prices to the point plebs cannot buy them themselves, and force many neighborhoods to be all single family rents.

Homeownership is a key part of upward social mobility; removing a lot of homes from the market makes that harder for people to achieve, while create large income streams for the firms via renta serfs.

No, they don't want this, and they have nowhere near the ability to do this. They are just scared of inflation, and housing is the smart way to bet against inflation (gold doesn't earn income).

Yes. They don't want a middle or upper middle class.

They want an ultra rich class and a class of serfs.

The exact opposite will happen in the long run, as this will cause even more houses to be made, making housing cheaper.

 

[Bear Ribs]

It could also be a maneuver to increase the value of existing holdings. A house's value is determined by how much nearby similar houses recently sold for. If they already own a number of houses, vastly overpaying for more houses will cause the value of their already-owned houses to dramatically increase, and assuming the right ratio of houses owned:houses bought they can make some very nice profits.

 

[LordsFire]

This isn't a bolthole, it's strategic acquisitions.

The want to raise housing prices to the point plebs cannot buy them themselves, and force many neighborhoods to be all single family rents.

Homeownership is a key part of upward social mobility; removing a lot of homes from the market makes that harder for people to achieve, while create large income streams for the firms via renta serfs.

I think you seriously underestimate how hard it is to do that on any more than a very local level. You need to not only buy up significant amounts of already-existing housing, you also have to buy up land new housing can be build on nearby, somewhat nearby, and the further you try to drive prices up, the further out you need to maintain your land monopoly.

To do it in a single metropolitan area, would take hundreds of millions or billions of dollars. To do it across the nation would take tens or hundreds of billions, and that's just for all the big cities. Trying to cover the small cities as well, I don't think there's an company or conglomerate in existence that could manage that if they liquified all assets.

Now, this doesn't mean that there aren't some people out there who'd like to accomplish what you're saying, but investing in financially resilient assets when inflation is ramping up is a more immediately-plausible explanation.

Or it could even be some of both.

 

[Abhorsen]

It could also be a maneuver to increase the value of existing holdings. A house's value is determined by how much nearby similar houses recently sold for. If they already own a number of houses, vastly overpaying for more houses will cause the value of their already-owned houses to dramatically increase, and assuming the right ratio of houses owned:houses bought they can make some very nice profits.

That only works a little. The problem is liquidating those positions. You have to do it while the prices are artificially inflated, and make enough of a profit to cover the losses you made on purchase. Is it doable? Yes. But if so, a selloff must be imminent.

 

[Bacle]

Where is this happening? Because there are ways to nit have to worry

I've seen reports of whole freshly built neighborhoods in TX being bought up like this, and it seems like they are trying for that in other places.

I think you seriously underestimate how hard it is to do that on any more than a very local level. You need to not only buy up significant amounts of already-existing housing, you also have to buy up land new housing can be build on nearby, somewhat nearby, and the further you try to drive prices up, the further out you need to maintain your land monopoly.

To do it in a single metropolitan area, would take hundreds of millions or billions of dollars. To do it across the nation would take tens or hundreds of billions, and that's just for all the big cities. Trying to cover the small cities as well, I don't think there's an company or conglomerate in existence that could manage that if they liquified all assets.

Now, this doesn't mean that there aren't some people out there who'd like to accomplish what you're saying, but investing in financially resilient assets when inflation is ramping up is a more immediately-plausible explanation.

Or it could even be some of both.

See what I said above.

Also, Blackrock does have the money to do stuff like this. They are a massive holding company/investment firm that buys and sells companies/subsidiaries for large sums of cash.

Very few groups have the funds to pull this off, but Blackrock is one of those few.

 

[Rocinante]

The exact opposite will happen in the long run, as this will cause even more houses to be made, making housing cheaper.

Well as mentioned, they apparently are buying up entire neighborhoods of new homes.

And depending on zoning laws, just building new homes isn't exactly always easy to do.

 

[Zachowon]

I've seen reports of whole freshly built neighborhoods in TX being bought up like this, and it seems like they are trying for that in other places.
See what I said above.

Also, Blackrock does have the money to do stuff like this. They are a massive holding company/investment firm that buys and sells companies/subsidiaries for large sums of cash.

Very few groups have the funds to pull this off, but Blackrock is one of those few.

Where in Texas?
That matters

 

[Bacle]

Where in Texas?
That matters

The WSJ article mentions Conroe, Texas.

The articles also point out other hedge funds and investment groups have been doing this for several years across the nation, so it's not just Blackrock that has had this idea.

 

[Bear Ribs]

The exact opposite will happen in the long run, as this will cause even more houses to be made, making housing cheaper.

These are multi-billion dollar companies with more than enough money to pay powerful lobbies to throw new housing regulations into place, making it nigh-impossible for new construction to reduce the value of their purchases. They're also buying out entire subdivisions which means they own all the land over a vast area, so no more houses can be made unless they wish it so.

That only works a little. The problem is liquidating those positions. You have to do it while the prices are artificially inflated, and make enough of a profit to cover the losses you made on purchase. Is it doable? Yes. But if so, a selloff must be imminent.

No, they don't have to liquidate those positions. You're thinking in very simplistic terms of buy -> sell a single item rather than how big business actually works via shuffling assets, tax reduction, and transfers of debt back and forth between multiple types of investment. F'rex at the very simples, they can depreciate their overly large purchase price over 27 years, using the houses as tax shelters while also generating rental income, which also comes with scads of further tax shelter options to protect other, high profit operations. They also have a line to government bailouts so if they do lose, they can make the taxpayers cover their losses which makes high-risk high-reward strategies much more viable.

The fact that they bought several tens of thousands of houses dirt cheap at foreclosure auctions shortly before this sudden spree of overspending on homes strongly suggests they're manipulating market prices to raise the value of their tens of thousands of cheap purchases. I suspect they're banking on an incoming monstrous number of people suddenly needing to rent when the current COVID crisis ends and the laws that have prevented foreclosures and evictions are repealed. I'm personally banking on the exact same thing with my own strategy now.

 

[Bacle]

Well this adds a new wrinkle to the plot.

 

[Zachowon]

Blackrock is also backed by the feds, and so all their money is Tax payer money

 

[Abhorsen]

Well as mentioned, they apparently are buying up entire neighborhoods of new homes.

And depending on zoning laws, just building new homes isn't exactly always easy to do.

In order: so what? That's barely a fraction of a percent of US housing. It's a non issue.

As for zoning laws, yes, but that's the zoning laws preventing people from getting housing, not the company. Without the company, it's still impossible to buy in those places.

These are multi-billion dollar companies with more than enough money to pay powerful lobbies to throw new housing regulations into place, making it nigh-impossible for new construction to reduce the value of their purchases. They're also buying out entire subdivisions which means they own all the land over a vast area, so no more houses can be made unless they wish it so.

Billions is nowhere near enough to affect the US housing market. The NY state housing market alone is $2.5 Trillion. They are multiple orders of magnitude away from being able to do anything.

2020 U.S. Housing Market Gains Were Biggest in 15 Years

/PRNewswire/ -- U.S. housing gained nearly $2.5 trillion in value in 2020 -- the most in a single year since 2005, according to a new Zillow® analysis. The...

www.prnewswire.com

they can depreciate their overly large purchase price over 27 years,

Right here I'm pretty sure you are wrong. Depreciation as a tax thing isn't needed anymore (it's a stupid idea to begin with) as of the Trump tax plan. Instead losses work more sensibly as all expenditures are losses now instead of phased in over years.

And using housing as a tax shelter isn't smart. You pay taxes on housing to the local municipality, at the very minimum.


In short, there's no conspiracy, just a company out for money as a shield vs inflation.