Private Investment Firm Blackrock is Buying Homes. What Does This Mean?

TL;DR (2-minute read)

  1. Private investment firm Blackrock is buying vast quantities of homes, around 80,000, driving up rent and property costs.
  2. This has contributed to a housing problem in growing cities in America, such as Atlanta, where Blackrock has bought nearly 12,000 homes.
  3. Many people have cited this as a critical problem to the stability of new homebuyers, who are being outcompeted by Blackrock and unable to afford homes due to the price inflation by Blackrock and other investment firms participating in the real estate market, with prices projected to go up by 12 percent this year.
  4. Housing prices have also gone up due to lack of housing units, as a result of supply shortages.

Key Questions:

  1. What is Blackrock doing in the housing market?
  2. What has been the reaction to Blackrock’s actions?
(Tony Andrews | Twenty20)

1: What is Blackrock doing in the housing market?

Wall Street investment firm Blackrock has recently started buying vast numbers of homes in growing cities in the United States, causing concern among homebuyers. Blackrock is a multibillion dollar investment firm involved in Real Estate and risk management. Through Real Estate company Invitation Homes, Blackrock has bought 80,000 homes in America, with about 12,000 homes in Atlanta. This has meant that Blackrock is at a position where it is able to drive up rent costs and property values, crippling the aspirations of homebuyers who do not have the financial resources to compete with Blackrock. According to The Blaze, “as many as 1 in 5 houses sold in the nation’s top housing markets is purchased by someone who will never move in. As a result… prices to continue to rise, climbing 12% this year and at least 6% more in 2022.” This is a major shift in the housing market, where now, Wall Street firms are the primary players in the real estate market. Overall, it has contributed to nearly “4 million home shortages” (Vox). Blackrock’s buying of homes has contributed to a housing crisis, with the reactions being primarily negative towards their actions.

(Xacto/Getty Images)

2: What has been the reaction to Blackrock’s actions?

Many have been critical of Blackrock and other private investment firms.  According to Pedro Gonzalez of Chronicles, “40% of American renters to believe they will never be able to purchase a home” (Fox News). Many have claimed that these high prices will hurt families, but they are not just the fault of private investment companies. Many have pointed blame at the lack of physical homes, due to high costs to build and zoning laws, making it tougher to build affordable housing. The current housing situation, with uber-high housing costs can be blamed on the lack of affordable housing units, along with the predatory actions of private investment firms, both of which have spurred a critical reaction from many people, citing the injustice and harm to new homebuyers who cannot afford homes anymore.

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