Amid Soaring Home Prices and Affordability Crisis, Blackstone Makes Colossal $10B Multifamily Purchase Following $3.5B January Deal
As home prices continue to soar across the United States, one behemoth in the real estate market is making waves yet again. Blackstone, known for its bold acquisitions and strategic investments, has just announced a staggering $10 billion multifamily purchase. As Americans grapple with the growing affordability crisis in housing, Blackstone’s latest move raises questions about the implications for both renters and homeowners nationwide.
$10 Billion Acquisition For AIR Communities
Blackstone Inc. agreed to pay about $10 billion to acquire Apartment Income REIT, the latest sign that the real estate manager sees a ripe moment to invest in property.
Blackstone agreed to acquire the apartment landlord, known as AIR Communities, for $39.12 a share, according to a spokesperson for AIR Communities. That’s a 25% premium from the company’s share price of $31.35 at the close of trading on April 5.
$3.5 Billion Acquisition of Tricon
Blackstone continues to expand its footprint in the housing market with its recent move to acquire Tricon Residential Inc., a single-family landlord, in a $3.5 billion deal earlier this year.
Blackstone Not Alone
Invitation Homes Inc., has announced a deal with three leading homebuilders to purchase roughly 500 newly constructed homes for approximately $140 million. These homes are slated to be situated in Charlotte, Jacksonville, and Nashville, with deliveries expected to commence later this year.
In 2023, the company received deliveries of 648 new homes and anticipates nearly 1,000 new homes from its new product pipeline in 2024.
Invitation Homes prioritizes markets characterized by robust demand, significant barriers to entry, and promising rent growth prospects.
Its primary operational areas include the Western United States, Florida, and the Southeastern United States markets.
Investors Snatch 26% Of Affordable Homes
In the fourth quarter of 2023, real estate investors secured a whopping 26.1% of affordable homes sold in the U.S as per a Redfin report. This figure, a record high, marks a significant surge from the previous year. Investors also acquired 13.6% of mid-priced homes and 15.9% of high-priced homes.
Home Affordability Worsening
Today, aspiring homeowners face a daunting financial reality: earning over $106,000 is now a prerequisite for affording a home comfortably—an 80% increase from January 2020. Median income has risen only 23% in the same time frame putting the dream of homeownership out of reach for many Americans as per the latest report from Zillow.
In 2020, a household earning $59,000 could afford a home without spending more than 30% of its income on mortgage payments. Today, a household would need to earn around $106,500 to afford the same. The typical U.S. household income is around $81,000.
Congress Passing Laws to Restrict Investors
There is still uncertainty about the extent of investors’ impact on the housing market. Concerns persist that investors may negatively affect ordinary homebuyers by inflating costs and worsening the shortage of homes available for sale. In response to these concerns, some lawmakers are pushing for restrictions on tax benefits for large corporate investors engaged in home purchases.
With a divided Congress and election season already upon us, no significant laws are expected to pass.
States Taking Up The Mantle
With a Democrat supermajority, California may be one of the first states to enact regulation at the state level.
Senators and Assembly members have proposed several bills.
Assembly member Alex Lee of Milpitas has proposed Assembly Bill 2584, which prevents institutional investors from acquiring and renting out more single-family homes.
Senator Nancy Skinner, a Democrat from Berkeley and Chair of the Senate Housing Committee, has introduced Senate Bill 1212, which prohibits institutional investors from “purchasing, acquiring, or leasing” single-family homes or duplexes under any circumstances.
Additionally, Assembly Bill 1333, proposed by Assemblymember Ward, targets the growing trend of “build-to-rent” developments by banning developers from selling homes en masse to large investors. The state’s REALTORS association supports this measure since bulk sales exclude their members from the transaction process.
Moving to Affordable Regions
The soaring costs of housing in various parts of the United States have prompted a notable trend of Americans seeking more affordable regions. Faced with skyrocketing home prices and increasing mortgage rates, many individuals and families are choosing to relocate to areas where housing is comparatively more affordable. This migration is driven by the pursuit of financial prudence and homeownership accessibility. Particularly, millennial and Gen Z homebuyers are adopting a pragmatic approach, opting for locales with lower living expenses and more budget-friendly real estate options. As the demand for housing in affordable regions grows, it reshapes demographic patterns and highlights the significant impact of housing affordability on migration trends.
Historically Low-Priced Areas Becoming Unaffordable
Real estate economists at Florida Atlantic University analyzed average expected home values based on historical data against current list prices across the nation’s 100 largest metro areas.
The study used publicly available data from online real estate portal Zillow or other providers from January 1996 through the end of last month, for single-family homes, townhomes, condominiums and co-ops.
The research aims to pinpoint cities with significant price disparities, shedding light on the challenges faced by long-time residents priced out of their neighborhoods amidst soaring real estate costs.
In the August 2021 ranking, no Florida metros made the top 10, signaling a stark shift in the state’s housing landscape. Today, 5 of the top 10 rankings of unaffordable cities based on historical data are held by a city in Florida.
“It used to be that you didn’t need a big salary to afford a home in the Sunshine State, but those days are over because this has become a market mostly for move-up buyers and empty nesters,” said Ken H. Johnson, Ph.D., a real estate economist in FAU’s College of Business. “Florida’s relatively low incomes should make housing affordability a key issue for a long time.”
Home Ownership Crisis
Rising inflation has made affordability worse from gas to groceries to home prices.
As the housing market continues to evolve, the pursuit of affordable housing remains a pressing concern for policymakers, investors, and individuals alike. The decisions made by key players in the real estate industry have far-reaching implications that shape the housing landscape and impact communities nationwide.
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Nearly a Million People Risk Losing Over $1 Billion in Unclaimed 2020 Tax Refunds If They Don’t Act by May 17
Tick tock, the clock is counting down for nearly a million Americans who stand on the brink of losing out on a staggering sum of over $1 billion in unclaimed tax refunds from 2020. With the May 17 deadline looming, it’s a race against time to secure what’s rightfully yours.
The 9 States Taxing Social Security in 2024 and the 2 That Just Stopped
As 2023 tax filing season draws to a close, retirees across the nation are adjusting their financial plans for 2024, but a crucial detail could drastically alter the landscape of retirement living: the taxing of Social Security benefits. While many bask in the belief that their golden years will be tax-friendly, residents in nine specific states are facing a reality check as their Social Security benefits come under the taxman’s purview. Conversely, a wave of relief is set to wash over two states, marking an end to their era of taxing these benefits. This shift paints a complex portrait of retirement planning across the U.S., underscoring the importance of staying informed of the ever changing tax laws. Are you residing in one of these states? It’s time to uncover the impact of these tax changes on your retirement strategy and possibly reconsider your locale choice for those serene post-work years. Here are the 9 states taxing social security benefits.
The 9 States Taxing Social Security in 2024 and the 2 That Just Stopped
Retire Abroad and Still Collect Social Security? Avoid These 9 Countries Where It’s Not Possible
Dreaming of retiring to a sun-drenched beach or a quaint village? Many Americans envision spending their golden years abroad, savoring the delights of new cultures and landscapes. However, an essential part of this dream hinges on the financial stability provided by Social Security benefits. Before packing your bags and bidding farewell, it’s crucial to know that not all countries play by the same rules when it comes to collecting these benefits overseas. Here are the nine countries where your dream of retiring abroad could hit a snag, as Social Security benefits don’t cross every border. Avoid living in these countries so your retirement plans don’t get lost in translation.
Retire Abroad and Still Collect Social Security? Avoid These 9 Countries Where It’s Not Possible
What SECURE Act 2.0 Means for Your Future Retirement Plan
Three years on from the groundbreaking SECURE Act, which revolutionized America’s retirement landscape for the first time in a decade, the SECURE Act 2.0 sequel legislation aims to widen the gateway to retirement plans and benefits, introducing pivotal changes like automatic enrollment in select workplace pensions, increased catch-up contributions for the seasoned workforce, and extended retirement saving opportunities for part-time employees. Moreover, it promises to bolster individuals’ ability to set aside emergency funds, ensuring swift access in times of need, marking another significant stride toward securing a more financially stable future for all. Here are some of the key provisions.
What SECURE Act 2.0 Means for Your Future Retirement Plan
John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
Here are his recommended tools
M1 Finance: John compared M1 Finance against Vanguard, Schwab, Fidelity, Wealthfront and Betterment to find the perfect investment platform. He uses it due to zero fees, very low minimums, automated investment with automatic rebalancing. The pre-built asset allocations and fractional shares helps one get started right away.
Personal Capital: This is a free tool John uses to track his net worth on a regular basis and as a retirement planner. It also alerts him wrt hidden fees and has a budget tracker included.
Streitwise is available for accredited and non-accredited investors. They have one of the lowest fees and high “skin in the game,” with over $5M of capital invested by founders in the deals. It is also open to foreign/non-USA investor. Minimum investment is $5,000.
Platforms like Yieldstreet provide investment options in art, legal, structured notes, venture capital, etc. They also have fixed-income portfolios spread across multiple asset classes with a single investment with low minimums of $10,000.
