Buying Up The Neighborhood

Big money investors are now buying up piles of homes, and whole neighborhoods. We’ll look at what’s happening with houses and the real estate market.

American housing – single family homes – went down hard in the crash. It was a wipeout in communities across the country. Then a tsunami of home foreclosures, and deep uncertainty about when and how the housing market would ever come back. Well, heads-up.

There are new buyers in town. Very big money – Wall Street players on down – right now buying lots and lots of single family homes. Thousands and thousands. It’s changing the market. It may change your neighborhood.

This hour, On Point: Big money moves into single family homes. Will you rent from Wall Street?
-Tom Ashbrook

Susan Wachter, professor of Real Estate and Finance at the University of Pennsylvania's Wharton School.

Dennis McGill, director of research at Zelman & Associates, a research and consulting group focused on the housing industry.

John Gray, global head of real estate at the Blackstone Group, which has spent more than $1.5 billion investing in single family homes.

New York Times "Perhaps no investment company is staking more on this strategy, and asking stock-market investors to do the same, than the one Mr. Miller is involved with, Silver Bay Realty Trust of Minnetonka, Minn. Silver Bay is the brainchild of Two Harbors Investment, a publicly traded mortgage real estate investment trust that invests in securities backed by home mortgages."

Mortgage News "The opportunity for funds to buy homes at discounts could last less than two or three years, Gray said yesterday at the Bloomberg Commercial Real Estate Conference in New York as record-low mortgage rates and home prices down 40% from the peak entice individuals back into real estate. Atlanta, Phoenix, Las Vegas and other markets hit hard by the worst housing crisis since the Great Depression are rebounding as the economy improves and the supply of homes for sale shrinks."

New York Observer "Mr. Gray, head of the real estate division at private equity powerhouse Blackstone Group, had just closed on the purchase of Mr. Zell’s Equity Office Properties. Blackstone had announced its bid the previous November, just 13 months after Mr. Gray had stepped into his new role. He had spent his entire career at the firm, so his ascent was not so surprising, and had managed 10 deals worth a combined $32 billion so far, so the territory was not exactly new. All the same, Mr. Gray was 37 years old at the time, and he had embarked on the largest leveraged buyout in history."