Second Home

Image source: Aquir, Andy Dean Photography - Shutterstock

What's going on?

Blackstone one of the worlds biggest real estate investors announced on Tuesday that it was spending $6 billion on the keys to residential landlord Home Partners of America (HPA).

What does this mean?

HPA owns more than 17,000 single-family homes across the US, buying would-be tenants properties of choice and offering them the chance to eventually become owners themselves. And homes are a hot market right now: sales activity hit its highest level since 2006 last year, with remote working and rock-bottom interest rates sending demand for bigger living spaces through the roof. Median prices, meanwhile, have increased by 28% since 2019. Thats attracted the attention of big investors, which snapped up 15% of US homes for sale in the first quarter of 2021. Blackstone which bought HPA from two rival private equity firms will be hoping that trend continues, turning the firm a tidy profit when it sells HPA to either other private or public investors.

Why should I care?

The bigger picture: Bad call or good call?


Private equity investors which have over $1.5 trillion burning a hole in their pockets have a reputation for sniffing out opportunities. And if the current US housing shortage takes a decade to fix like some analysts are predicting, the firm could ride the residential real estate wave for a while yet. But the global housing market is showing the telltale signs of a bubble, and Blackstones big move could just as likely be a rash call (tweet this).



For you personally: This could affect the whole real estate market.


Private equity firms have a reputation for bumping up prices to generate as much cash as quickly as possible. And while HPAs portfolio represents just 0.25% of single-family homes in the US, higher rents and home prices from Blackstone could encourage other residential real estate owners to follow suit making it harder for tenants and buyers alike across America.

Originally posted as part of the Finimize daily email.

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