This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Blackstone Defends Its Role in Housing Recovery

NEW YORK (TheStreet) -- Over the past year, Blackstone (BX) and other Wall Street investors have been buying up thousands of single-family foreclosed homes in bulk and converting them into rentals, a business that has been viewed with skepticism by housing bears and with concern by first-time homebuyers who believe institutional investors are driving up home prices to unaffordable levels.

An editorial in the New York Times on Sunday argued that the housing recovery has been investor-driven and that "the pain and damage" from the housing bust will linger for a long time.

Blackstone, which buys single-family homes through its Invitation Homes subsidiary, disagrees. In a blog post Monday, it defended its role in the housing recovery, arguing that critics who blamed investors for rising home prices were wrong and ignored the positive role that private capital played in the market.

"We are proud of what we are doing in the housing market," Blackstone said in the post.

First, some context. Home prices rose 11% in the 12-months to March, the most since 2006. That topped a 9% gain in the 12 months to February, prompting concerns in some corners of the market that home prices may be rising too fast.

New home prices hit a record in April, with median prices rising to $271,600. The rise has been mostly driven by a changing mix of homes being sold. Builders are selling more expensive, bigger homes rather than cheaper homes for first-time home buyers.

First-time home buyers have also been locked out of the market due to tight credit conditions for mortgage approvals.

Even those who can get a mortgage are struggling to find a home in this soaring market, thanks to an unprecedented shortage of homes available for sale.

Concerns that investors are causing home prices to rise are overblown, the Blackstone post argued. "Blackstone is not buying houses in sufficient numbers to make an overall difference in house prices," it wrote. Blackstone through its subsidiary has purchased 29,000 homes, which pales in comparison to a housing stock of 115 million homes. Its purchase of 25,000 homes in the past year was less than 0.5% of 5.6 million in total home sales. It is also active in only 13 metropolitan areas.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,982.59 +22.02 0.13%
S&P 500 1,978.91 +0.57 0.03%
NASDAQ 4,444.9090 -4.6550 -0.10%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs