Following on yesterday's miniseries* which had Blackstone in the starring role, here's another one.
From Wolf Street, August 11:
Biggest investors in single-family houses: “We need to be patient and allow the market to reset.”
....MUCH MOREWe’re now getting all kinds of commentary from housing industry insiders and big institutional investors in single-family houses. They’re talking about this during their earnings calls.
American Homes 4 Rent is one of them. The company was founded during the Housing Bust and bought up tens of thousands of single-family houses that it then rented out. In addition to buying houses, in recent years it has started building its own subdivisions with just rental houses, that are specifically built for rentals. The company received enormous amounts of funding over the years from investors, including when it went public via an IPO in 2013.
So American Homes 4 Rent, during its earnings call last week, said a bunch of things that we have already seen in the data. And the data coming from all directions has for months been pointing at a housing downturn.
There is now a huge supply of new houses for sale, in all stages of construction, over 9 months’ supply in total, according to the Census Bureau. In terms of the number of houses, by June, there were 463,000 new single-family houses at all stages of construction for sale, the highest since May 2008, and up by over 30%, from a year ago.
Homebuilders’ cancellation rates spiked to nearly 18% of their total signed contracts in July, more than double from earlier this year and last year, according to data from real estate consulting firm, John Burns. And this cancellation rate was even worse than the cancellation rate in April 2020, during the lockdowns.
The Census Bureau reported that sales of new single-family houses have plunged 17% from a year ago, and are just barely above the lockdown low of April 2020.
The National Association of Homebuilders reported that its index for foot traffic of prospective buyers of new houses plunged in June and is now down to levels not seen since 2014, except during the lockdowns in March and April....
*"The housing recession will continue and eventually flatten house prices, Goldman Sachs economist says"
Sometimes I wonder if the Fed spent the last three months of "QT"* just waiting for the big banks to get their derivative books in order before doing a rugpull on real estate....
In Case You Missed It: "Blackstone Puts Finishing Touches on Record Real-Estate Vehicle" (BX)
Opportunistic, thy name is Blackstone....
Got it? Pull back from the market which a) avoids top-ticking and b) accelerates the downward trend already in place.
Wait.
Deploy cash offers when retail buyers have to contend with comparatively sky-high mortgage rates.
