NEW YORK (
) -- Over the past year,
(BX - Get Report)
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
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.