NEW YORK — Blackstone Group LP, which has spent $5 billion to acquire almost 30,000 U.S. single-family houses, is nearing the later stages of its buying as home prices jump, said Jonathan Gray, the firm’s global head of real estate.
The market has become more “challenging” as competitors enter the business of buying homes to rent out, Gray said Monday.
Blackstone (NYSE: BX), based in New York, has acquired houses in 13 metropolitan areas and is continuing to make purchases, he said.
“For our type of capital and the returns we hope to generate, my guess is we’re in the later stages of this,” Gray said. “That does not mean the housing recovery itself will not continue for a number of years.”
Blackstone is the largest of the private-equity companies taking advantage of the foreclosure crisis to build portfolios of single-family homes to rent, helping to diminish supply and drive up real estate values in some areas.
U.S. home prices jumped 10.9 percent in March, the most in seven years, according to the S&P/Case-Shiller index of 20 cities.
Blackstone’s purchases represent a fraction of the U.S. housing market and rebounding prices are the result of basic supply and demand,
Gray said. U.S. population growth has outstripped homebuilding because property prices aren’t high enough to spur new construction, creating a shortage, he said.
“There are about 150 million homes in the United States,” Gray said. “We own about 29,000. In the last year, there were 5.6 million homes bought and sold. Of those, we were 24,000. We are a very small percentage.”
The housing recovery is “midstream,” with the eastern part of the U.S. representing good value, Gray said.
National prices are still down about 28 percent from the 2006 peak, according to the Case-Shiller index.
The potentially wild and crazy Slider Contest (that I said could go $100,000-$200,000 in either direction) came to a rather unremarkable close yesterday.
The list price was $995,000, and it closed for $1,000,000 cash:
I’ll give doughboy, a 2x past client (and future), the contest tickets to the Giants game on September 2nd. Because I am out of tickets, if the other four want to email me any favorite teams or dates, I will pick-up tickets for you.
The last period had 87 new listings, and 64 new pendings – this period produced a 77:69 mix of new and pending listings. Of the 69, there were 22 that were on the market seven days or less (32%):
The UNDER-$1,200,000 Market:
Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
April 29
201
$384/sf
36
2,599sf
May 5
195
$381/sf
36
2,633sf
May 9
207
$387/sf
35
2,624sf
May 18
241
$397/sf
33
2,566sf
May 23
236
$397/sf
34
2,529sf
May 30
230
$391/sf
35
2,591sf
June 5
229
$393/sf
35
2,577sf
June 11
239
$390/sf
34
2,569sf
The OVER-$1,200,000 Market:
Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
April 29
620
$806/sf
94
5,183sf
May 5
606
$806/sf
93
5,223sf
May 9
628
$808/sf
93
5,150sf
May 18
653
$807/sf
92
5,161sf
May 23
661
$814/sf
92
5,141sf
May 30
659
$805/sf
95
5,222sf
June 5
663
$794/sf
96
5,185sf
June 11
672
$779/sf
96
5,163sf
Buyers want to find their new home by mid-July at the latest so they can close escrow and get settled before school starts in fall. The next five weeks are going to be an excellent time to sell a house around NSDCC.
The first part of my tour today with Giorgio Angelini and Guy Mossman talking about the real estate market for their new documentary. Guy was in charge of cinematography for the movie, “Buck”, which won the 2011 Sundance Film Festival U.S. Documentary Competition Audience Award.
Mortgage rates continued higher today, further extending the push into fresh 15-month highs confirmed on Friday. The secondary mortgage market didn’t lose any ground by the end of the session, but volatility trading conditions during the day, along with other factors, kept lenders more defensive (in that rates are higher than they would be if markets were FLAT at current levels).
The weakness wasn’t enough to change the Conventional 30yr Fixed best-execution rate of 4.125% (with no points), but it should be noted that there is a wider than normal discrepancy between lenders in terms of how rate sheets have changed from one day to the next.
Just as the pendulum pushed far to the positive side of the rate range in April, the opposite swing occurred in May (now the worst single month for rates on record since 2008).
There will be more 20-somethings over the next 20 years than at any time in the country’s history, which apartment developers and lenders need to remember when thinking about construction and rental prices.
This was one piece of advice that Dr. Richard Green, director of the Lusk Center for Real Estate at the University of Southern California, gave about 200 attendees at his talk on economic and macro apartment supply and demand at the Pacific Coast Builders Conference on Thursday.
“There will be about 2 million more 20-somethings this time around than the ones from the [1980s and1990s],” Green said.
Green also said that multifamily builders and landowners need to pay attention to people entering their 60s.
Those 65 years old, on average, start to downsize their living situation, Green said, adding, “You want to think about people in their 60s as a target market for apartments.”
Green asked the audience a key question: Do Americans want to own a home right now?
We probably had 100+ people come to open house this weekend, and in various stages of moving. Experienced lookers, first-timers, looyloos, neighbors, and a couple of potential sellers too!
Statistically it will only get recorded as one sale, but the volume of people in the hunt is a healthy sign for the market:
If desired, Zillow could devise a new PublicMLS system – they have the format, reputation, and eyeballs to get off to a flying start.
Redfin could too, but as a brokerage they are going head-to-head with traditional realtors so it’s more likely afight would erupt, where Zillow is a third-party and could be positioned as an ally.
Auction.com is knocking on the door too – have you seen some of the heavy advertising they are doing these days? Could they take over?
They seem to have the desire, because they are selling everything now – trustee sales, bank-owned properties, commercial properties, land, mortgage notes, and auctioning regular home sales too.
The package sounds good to sellers:
You set the reserve price so you don’t “give it away”.
You have a set timeline for selling/moving.
Buyer pays the 5% commission.
But will sellers get top dollar? Convincing them won’t be easy.
If auction.com can convince the agents first, and partner together to help blaze the trail it would be smart. Here is their first attempt:
It sold for $1,102,500 or 110% of the reserve price and closed 9/14/12.
BUT WAS THAT TOP DOLLAR?
Sellers would need conclusive proof to be convinced – it’s not enough for sellers to just get the reserve price, they want top dollar!
Let’s do what a potential seller would do, and try to estimate the value of their auction house.
But first let’s note that the sellers had been trying to sell since early 2011 – they had already exhausted the market, starting with their initial $1,649,000 in March 2011, and wound up being listed for $1,299,000 for the nine months preceeding the auction. Based on that alone, it probably wasn’t worth $1,200,000.
Using comparable sales from that era, it looks like it may have “comped” for $1,300,000, or so, and sellers who generate their own comparison will think it that the auction gave it away:
However, those comps were inconclusive at best – the two in Monarch Bay are paying $2,400/mo HOA for that privlege, and trying to estimate the proper view premiums is just guessing. But if you are a casual seller using the only tools available, you/re not going too look too hard – especially when you are just looking for a reason to say no.
Here’s a review by a Redfin agent calling the floor plan “unusual”:
Large lot with pool, sand/beach area, updated bathrooms, wood/tile/carpet flooring, unusual floor plan.
The sales price might have been as high as any buyer would have paid, but without easy and conclusive proof, sellers will be wary of auctions – because the last thing they are going to do is “give it away”.
The bank rejected the $825,000 high-bid from in the first auction, so they put it back on again with the same teaser opening bid of $450,000.
The ultra-low opening bids are a deterrent from being able to get to top dollar, because of the gap. As a result, the buyers will focus solely on going high enough to hit the reserve price, and even going that high will seem like over-paying to them when the opening bid is so low. They already resent having to tack on the 5% vig, so they will be aiming low.
The lack of conclusive proof plus the ultra-low opening bids will make regular sellers be skeptical that buyers will ever hit their top-dollar number.
I had at least 40-50 people stop in, including 11 realtors. Most were familiar with the model-match house that just went pending 100 yards away – and who raised their price from $640,000 to $660,000 at the same time.
My listing is priced at $649,900 – scroll down to previous post for tour:
NEW YORK — Blackstone Group LP, which has spent $5 billion to acquire almost 30,000 U.S. single-family houses, is nearing the later stages of its buying as home prices jump, said Jonathan Gray, the firm’s global head of real estate.
