The epidemic housing boom brought many investors into the US housing market. Mom and pop landlords quickly moved in. Airbnb hosts added to their portfolio. Amateur home rides are back with a vengeance. House price appreciation also brought in the big dogs: Wall Street.
But that party is now over. Or at least paused.
Look no further than Home Partners of America, owned by Blackstone. The firm, one of the nation’s largest private landlords, announced at the end of September that it will end single-family purchases in 38 regional U.S. housing markets.
We evaluate a number of factors, such as home price appreciation, state and local regulations, and market demand, to guide our investment plans to best serve consumers. “We expect to continue to buy homes in these markets in the future,” America’s Home Partners wrote in a press release.
Home Partners of America, which will be acquired by Blackstone for $6 billion in 2021, is putting average Joes and investors on hold on their home buying plans. The results aren’t pretty: Year-over-year, existing home sales and new home sales are down 20.2% and 29.6%, respectively.
Blackstone-owned Home Partners of America’s announcement also comes as more Wall Street firms are realizing that the intensifying housing correction could translate into falling home prices. Last week, Fitch Ratings released a report showing that US home prices are at risk of falling by as much as 15 percent. This week, Moody’s Analytics downgraded its outlook for US home prices – estimating that a 5% to 10% decline in prices is on the cards.
That begs the question: Are Wall Street firms simply shelving their buyout plans in anticipation of better deals (falling prices)? After all, companies like Blackstone have long made it clear that they want to own more-less-than-single-family homes.
If a recession hits, Moody’s Analytics thinks home prices in “overvalued” markets like Boise, Reno and Spokane could drop 15 percent to 20 percent. Those at-risk markets are among the areas where Home Partners of America plans to halt acquisitions. Some other “paused” markets are also at risk, including Deltona and Columbus. Some others are not. In fact, Moody’s Analytics thinks home prices in Cincinnati are likely to rise.
In the year In 2019, Blackstone returned from the single-family home business after selling off its remaining shares of the hospitality houses. In 2020, it’s already back in the game. Then in the year In 2021, it made a big splash by buying American Home Partners. At the time, Home Partners of America owned 17,000 single-family homes.
While Home Partners of America plans to expand in 38 markets, it doesn’t plan to stop buying altogether. It operates in a total of 76 regional housing markets. This “pause” only affects 1 in 2 of those regional markets.
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