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.