Home Inventory Shortage Compounded by Wall Street

Guess who owns 12,556 homes in Atlanta? An interesting point: it’s a spin-off from the world’s largest private equity company, BlackRock, also known as Invitation Homes.

Why is that important? According to a recent article, in certain Atlanta zip codes, Invitation Homes bought 90% of the homes for sale in the early 2010s. I find that at least interesting, and even more disconcerting.

They are not simply buying the homes to flip; they are buying homes which are low-middle-priced homes in middle-class neighborhoods for the purpose of creating a revenue stream for the long-term. Based on recent analysis, it takes them only eight or nine years to recover the cost of buying a home, but all the while creating a revenue stream. Not only is this a fairly low-risk investment but it does not factor in property appreciation, which over the last year alone was over 29%.

This investment strategy then shrinks the number of available homes in that zip code that are available for sale to middle-class buyers but they do so by financing them at sub-market level, making the cost less because they’re paying a lower mortgage rate than the single-family buyer would.

Most of the homes they are buying are found in relatively inexpensive single-family neighborhoods that are considered growing metro areas.

So where do these Wall Street firms look to stake their claim? Well, according to Redfin, they like Atlanta, Charlotte and Phoenix.