Tags: home | Phoenix | Wall Street | prices

New York Times Gets it Wrong on Housing

By    |   Wednesday, 12 Jun 2013 07:39 AM

The New York Times recently attributed the rise in home prices to the buying of Wall Street firms. Blackstone and other investment managers are buying large numbers of home and, in the opinion of the paper of record, artificially driving prices up.

Blackstone has bought 26,000 homes and Colony Capital, another investment firm, has 10,000 units. Colony is spending $250 million a month on homes.

With the average price of a single-family home at $193,300, Colony will be able to buy about 1,300 homes a month, or 15,600 a year. This will account for 0.31 percent of the home market this year.

The size of the home market, with more than 98 million single-family homes in the nation, makes it difficult to believe that Wall Street is behind the double-digit price gains reported in home price indexes.

The Times story worries about the potential price declines that will follow if investment firms stop buying. They highlight the Phoenix market, where investors accounted for only 25 percent of home purchases in March, down from a 36 percent share of the market last summer.

The S&P/Case-Shiller Home Prices Index for Phoenix was up 1.7 percent in March, despite the decrease in investor activity. Prices are up 13.6 percent since last summer in Phoenix, when investor interest seemed to have peaked according The Times. Home prices are still well below all-time highs, but seem to have found a bottom.

Even with billions of dollars, Wall Street firms are a small part of the housing market. RealtyTrac estimates their total activity accounts for less than 5 percent of home sales nationwide.

Their buying should help stabilize prices since they will enter markets when prices offer value. The market for existing homes seems to be in a sustainable recovery and investor interest is a positive indicator of demand.

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MichaelCarr
The New York Times recently attributed the rise in home prices to the buying of Wall Street firms. Blackstone and other investment managers are buying large numbers of home and, in the opinion of the paper of record, artificially driving prices up.
home,Phoenix,Wall Street,prices
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2013-39-12
Wednesday, 12 Jun 2013 07:39 AM
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