Are You Worried About A Big Investment Firm Buying Houses Locally?

The New York-based investment firm, Blackstone, just spent $60 million betting Sacramento real estate prices will increase. Do you think it's correct?

Would a large New York-based investment firm betting $60 million that local real estate prices will soon increase make you a more or less confident home owner?

That investment firm Blackstone, a company group with billions invested in offices and residential real estate worldwide, did just that, and according to a Sacramento Bee story, is willing to bet the outcome is positive for new and existing home owners.

According to The Bee, the purchase marks, "the first time a major investment firm has bought in Sacramento on such a scale – a direct result of the thousands of houses left vacant by foreclosures in recent years and offered at fire-sale prices."

Though some experts can see the investment implying an improving real estate market, others see the move squeezing out first-time home buyers as well as existing homeowners.

**What effect do you think it'll have here? Let us know in the comments section below.**

A spokeswoman for Blackstone told The Bee the purchase is a long-term investment. Echoing the sentiment, Eric Peterson, a spokesman for Praxis Capital, a Sacramento-based property management firm, said Blackstone is, "betting on appreciation."

Peterson explained Blackstone's attitude toward the purchases as betting the investment today would double in as few as five years.

Blackstone arrived in Sacramento in August, opening a Roseville-based purchasing partnership under the name of THR California, according to The Bee. After analyzing county records, The Bee concluded THR spent $60 million in the Sacramento foreclosure market. By October the company had purchased 250 homes in the Sacramento area.

According to The Bee only one of about a dozen homes visited by reporters had a tenant: John Coaxum of the Northgate neighborhood in Sacramento. The 14-year tenant of the home now faces the prospect of being evicted. According to The Bee, "when THR bought [the home] from the bank, the company wanted more money, which [Coaxum] didn't have, he said."

The Bee reports THR purchased 40 homes in Elk Grove, where mayor-elect Gary Davis said he shared Coaxum's concern. The new mayor noted when potential home buyers have to compete with a large corporation like Blackstone, "it makes it hard for residents to get a foot in the door and get their house."

In Citrus Heights, where, according to The Bee, Blackstone purchased 60 homes, mayor Jeff Slowey had an alternate position on the investment, saying, "they think it's a good market, and it's going to turn around."

What do you think of a large company coming to town and buying up homes? What kind of effect do you think it'll have here? Tell us in the comments section below.

Brian Phillips November 28, 2012 at 09:05 AM
with so much shadow inventory and low rates expected to sky rocket, and more foreclosures this year than the last few years combined....no one will be buying houses in a year or two, house prices will plummet, food prices expected to sore from lack of water. better to buy houses when rates are high and make money when the rates go low again. look at what happened in the 70's and the 80's...the goverment is hoping new buyers will save the economy, but the government spends and prints too much money too fast...it's just not sustainable. if housing goes up it will be because the dollar devalued, and when and if that happens....everything will be expensive so an increase in housing prices will be irrellivent when bread, sugar, and a latte are $20 each!
Votedemout November 29, 2012 at 12:22 AM
Why do I think the Blackstone folks have a little better grip on the financial situation than you. There is a reason why they manage billions of dollars. Your post is exactly why they are buying now, for they leverage their money and will pay for these properties with far less valuable dollars and make a killing for their investors. That money you are sitting on in your bank account will be seriously reduced in its buying power and the dollars that Blackstone invests today will be protected by the hard asset they own. You folks trying to buy at a bargain price better raise your offers or be left holding a fist full of worthless dollars.
Racerx Gto November 29, 2012 at 12:47 AM
Votedemout, correct. A misconception that many homeowners have is that when the dollar collapses, they will still have real tangible value. They couldn't be more wrong. Real estates value is dramatically effected by the paper/debt market as it is bought with mortgages/debt/ paper and leverage. Every homeowner should ask themselves what their property is worth without a 30 year mortgage on a dead dollar?** Blackstone's strategy intends to avoid this. _________________________________ ** properties sitting on oil land not applicable
Chris November 29, 2012 at 02:32 AM
Everyone needs a place to live--whether they own or rent. Blackstone's locust-like devouring of the low-moderate housing market will ultimately be devastating to communities and their residents. For anyone who's seen, "It's a Wonderful Life"--they are creating today's version of the film's Potters Field. Lack of affordable housing will create more homelessness, higher rates of crime, and a drag on the economy. People will be spending a lot more on Blackstone's jacked-up rents, than at local businesses. Neighborhoods will suffer from a lack of pride of ownership. When I read about Blackstone, I couldn't help thinking "there ought to be a law against this". Enough's enough--Main Street Americans need some protections from avaricious "investors" who could give a hoot about communities and the people in them.
Brian Phillips November 30, 2012 at 12:45 AM
i agree chris, it's not about how much money you manage it's about how well u manage it, there's return of capital, and then there's return on capital...for billions managed, leveraged to the max, and poor investments in housing, look what happened to bear stearns and lehman brothers . supply and demand and employment determine housing prices and rent prices. if everyone rents and homeowners don't sell then prices go down...look at south sacramento. better to invest in precious metals and treasury inflation protection securities, wait for them to appreciate, wait for the dollar and housing to depreciate another 20%, then pay cash for houses. i think the days of flipping houses for a quick buck are over. housing will remain a bad investment for many more years, just because u can buy doesn't mean u will be able to sell....better to stick to something more liquid like stocks, and not worry about property tax, and having to find a buyer for housing which is like a pump and dump penny stock that no body wants. if the dollar failed and everything when up in price, no body would be able to buy a house anyway. you should check out the next currency for our country, canada, and mexico...it's called the amero. currency changes nations.


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