Why corporations are buying up America’s houses


There’s been a lot of fuss in the news lately about how companies such as Blackrock are buying up houses left, right and center, often paying over the odds (as much as 15-25% above market) to get them.  Many warn that this means the chances of new buyers actually finding a house they can afford are getting smaller by the day – and they’re right.  However, there’s another side to the picture, and that is the inevitable result of the Federal Reserve’s policies and the inflation they’re generating.

Put yourself in the position of the average investor (or of Blackrock, which is an investment company, and its peers).  Interest rates offer no real return at all on capital – in fact, in a high-inflation but low-interest environment, they offer a negative return.  Your dollars are losing value every day they sit in a bank account, or in your wallet.  The stock market is in a bubble of enormous dimensions, with share values vastly overinflated, and the bond market supported by all sorts of artificial measures that distort its structure.  What’s an investor to do with his money to make a return on it?

The answer appears to be, at present, the property market.  Property prices have been rocketing upward, buoyed by easy credit, stimulus money, and low interest rates.  That’s what makes it meaningful for a company to offer a 15-25% higher price for a house than its market value.  Not only does it guarantee that the company will get the house, even in the face of competition from other buyers;  it’s also realistic, in that the company knows rising prices will raise the market value of the property to match what it paid within two to three years.  That’s not a long time to wait, when there are no other worthwhile investment outlets for that money.

What’s more, the rise in property values is, right now, the only thing that’s keeping pace with – if not exceeding – the actual, real rate of inflation (which, as we’ve seen, is far higher than the official figure).  Companies know this – they’re not blind.  If their dollars are worth less with every day that passes, why not buy something that will appreciate in market value to offset inflation?  Right now, that’s housing.

There’s also the element of market domination.  If more and more people can’t find houses to buy at an affordable price, and are therefore forced to rent instead, they’ll be forced to pay whatever the landlord demands (within reason, of course).  Companies are betting that if they control a big slice of the housing pie, they can increase their rent demands and get away with it, because consumers will have no choice but to pay them.  That gives them an even bigger return on their investment in property.

So, when you see reports of companies paying over the odds for worthwhile properties, understand that their behavior makes commercial sense.  They’re doing what they can to preserve the value of their investment funds, and make a decent return on them.  The fact that it’s driving the property market to insane levels is a side-effect.

There’s a downside, too, of course.  Many of the big rental companies are skimping on maintenance and services, to reduce their expenses – at the expense of their renters.  Good for their bottom line, bad for us.



  1. And the disaster for long term home owners [in Texas] that see their ad valorem taxes double every 8 or 9 years and the paycheck stay stagnant.

  2. Oh that makes it OK, sure regular people are getting priced out of the market but as long as Blackrock is making money it is just fine.

  3. With maintenance lacking on these rentals, people are not going to do them. So, people move and the house stays empty because of a broken hot water heater, roof leaks and now you have a house in a few years will be vandalized and possibly condemned because it is a hazard and a nuisance property.

  4. Our country is headed to where places like the UK are; a few wealthy landowners with the rest of the population renting from them… I seem to recall we fought a war to get away from this kind of system…

  5. I rented a home from one of Blackrock's subsidiaries, Invitation Homes, from 2015-2019. I watched the quality of the maintenance management system go to hell in 2018-2019. It actually started off pretty good. By the last 6 months, when the garage door spring popped, and my wife was unable to open the door (I was at sea), they said it would be 4-6 days to get someone out. My wife's car was inside. So I called them back, on hearing it, and said that my brother was going over there with a gas-powered concrete cutter the next day to open the door like a tuna can. They had someone there for the 45-minute fix that night. Plumbing callbacks also went from 24 hrs between call and service to 3-4 days.
    I'm a big fan of economic non-intervention, however. I'm uncomfortable with sellers not being able to sell property to whom they wish to sell, especially for ideological reasons. When the time comes to sell my house (which has appreciated 25% in a year, in this bubble, which I presume will pop before I wish to leave), I damn well expect to sell it to whoever I want, and I'm going to get the maximum possible.
    I'd hate to sell to Blackrock. They're assbags. Assbags with bags of money, though. I'll also note that they are not a bargain. Rent is very comparable pricewise to what a mortgage would be. The house next door went for sale, and the mortgage would have been about 5% more than the rent I was paying.

    I live in a neighborhood with an HOA, may God help me, but we have an owner-occupier restriction. No rentals or leases. That is one defense.

  6. It is a logical extension of the current inflation, BRM. It is also not a great long term outcome for renters or those looking to buy a home. That said, why the blame is not put more firmly on the arguably criminal negligence of the government inflating the currency is beyond me.

  7. Hey Peter;

    It is also my belief that if they can bankrupt a huge chunk of the middle class, you have people pulling $50,000+ out of their 401K's on top of what they are putting down on appraisals because of the bidding wars going on for houses. I wonder if this is a byproduct or a design enhancement to turn a huge bloc of people from hone owners into "renters" and impoverish them at the same time. Gotta punish those middle class Trump supporters you know.

  8. The same thing happened in the Germany during the hyperinflation. Durable goods, and real estate got bought up (that time by farmers) and and paid with worthless currency. Der mark est der mark after all.

  9. In California it would be legal suicide if they are doing this type of stuff on maintenance. Trust me, you do not want to be involved in a lawsuit from tenants in Ca. In So. Ca I have not heard much about institutional buyers for single family Homes. Probably because the selling price vs rents (cap rate) just does not make sense here.

  10. 1) That's a recipe for rent control measures to pass from coast to coast.
    2) Given enough incentive, Jewish lightning (a sudden unexplained fire) will start striking corporate-owned rental units.
    3) Given corporate diligence, those neighborhoods become tomorrow's slums.
    4) HOAs, once they discover corporate deep pockets are infinitely and indefinitely tapable, will become compliance citation nazis that would shame actual Nazis.

    FWIW, a friend from work bought a house 9 mos. ago, and it's already appreciated 25% in value (on paper) since his purchase.
    He just re-financed for 6 years' less mortgage, at a lower monthly cost than his original loan, and he'll be paying off a 25-year note in only 18 more years. IOW, his house is now valued $100K higher, and he'll be paying about $100K less to own it.
    Ain't no fiatbux or stock that can provide that sort of ROI.

  11. We're in a financial death spiral, BRM. Some of us are in a better position than others, but we're all circling the drain together.

    Parasites like Blackrock are doing what they (literally) have to do to keep their ROI positive, and the mutants in government are fiddling while Rome burns.

  12. As with anything, part luck and part preparation get you ahead of the curve.
    We are currently closing the sale of a seriously overvalued house, cashing out a 401K, buying a semi rural property, then selling the also seriously over valued house we are now in. Gonna end up free and clear, cash in pocket, safer and more secluded.

    Again, part luck, part preparation and fortuitous timing. We cannot keep the wheels from falling off, but we can certainly slow our own ride so the crash is not as bad.

  13. "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."

    We are just about there.

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