We have seen it for several years now: foreclosure salesâ€”there were 5 million since the peak of the housing bubbleâ€”have become the hunting grounds for investors with two goals: hanging on to these homes until the Fedâ€™s flood of money drives up their value; and defraying the expenses of ownership by renting them out. And funds have a third goal: collecting management fees. Thousands of smaller investors have piled into the game. And so have the giants.
Blackstone Group LP, the worldâ€™s largest private equity firm, plowed over $3.5 billion into the housing market, according toÂ Bloomberg, to gobble up 20,000 vacant and foreclosed single-family homes. It just fattened up a credit line to $2.1 billion to do more of the same. Colony Capital LLC, which already owns 7,000, is putting $2.2 billion to work.
Last year, institutional investors made up 19% of all sales in Las Vegas, 21% in Charlotte, 23% in Phoenix, and 30% in Miami. It had an impact. In the latestÂ Case-ShillerÂ reportâ€”a three-month moving average for October, November, and Decemberâ€”home values soared 9.9% in Atlanta, a bigger jump thanÂ even during the peak of the housing bubble. Las Vegas popped 12.9%, and Phoenix 23%. Itâ€™s getting hotter. In February, compared to prior year, asking prices jumped 14% in Atlanta, 18% in Las Vegas, and 25% Phoenix. Seen from another point of view: in January, the median price of a single-family home in Phoenix skyrocketed 35%.
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David CooperÂ www.lasvegaswinner.orgÂ 702.499.7037
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