Lets discuss the story that BlackRock is purchasing entire neighborhoods for 20-50% over asking, funded by the federal reserve, and using your tax dollars to buy real estate - Enjoy! Add me on Instagram: GPStephan
LIMITED TIME: GET YOUR FREE STOCK WORTH UP TO $70 & DEPOSIT $100 FOR A CHANCE TO EARN A FREE SHARE OF TESLA - USE CODE GRAHAM: https://gstephan.co/public
The YouTube Creator Academy:
Learn EXACTLY how to get your first 1000 subscribers on YouTube, rank videos on the front page of searches, grow your following, and turn that into another income source: https://bit.ly/2STxofv $100 OFF WITH CODE 100OFF
THE NEW PODCAST: https://www.youtube.com/channel/UCMSYZVlQmyG8_2MkIKzg0kw
Here are my thoughts on the current state of the housing market, housing inventory, and the future of the real estate market in 2021.
So, basically…here’s what’s actually going on.
It’s understandable that people are ANGRY, and it’s easy to blame a faceless, nameless wall street corporation as the root cause…but, truth be told…you want to know who’s driving up the housing prices? It’s literally EVERYONE looking to buy a house, incentive to own real estate because interest rates are really, really cheap. That’s it.
Think about it RATIONALLY…for a giant company like BlackRock, taking the time to compete with 20 offers in random residential neighborhoods across the country would be logistical nightmare. For them, it DOESN’T MAKE SENSE, and in order to make a profit - they need to operate within the economy of scale, and have the infrastructure already setup and running in order to make offers, keep properties leased, and make repairs. They aren’t sending handymen out from city to city fixing leaky sinks…
Instead, institutional investors are WAY more likely to DEVELOP THEIR OWN subdivisions IN SCALE, PURPOSELY BUILT to be rented out as a long term investment. This way, they keep the profit margins to themselves, they pay significantly less than it would cost to build each home individually across the US, and they can maintain quality control from start to finish. If anything, they’re HELPING add more inventory to the market, and taken AWAY the burden of a housing shortage that’s plaguing the entire country.
The Urban Institute also argued that “there really isn’t any evidence in our research that institutional investors led to higher rents or greater eviction rates for our sample of counties tracked through the recovery.” meaning…institutional buyers are NOT the ones responsible for the current state of the housing market.
I would bet that, instead…it’s every day, ordinary home buyers who are paying over asking because they want to lock in a rate, knowing that - historically - real estate does well if inflation begins to increase.
ALL SOURCES:
Fundrise Buying The Neighborhood For $32 Million Dollars:
https://fundrise.com/investor-update/518/view
Financial Samurai Article:
https://www.financialsamurai.com/institutional-real-estate-investors/
Investor Sales:
https://www.marketplace.org/2021/04/13/institutional-investors-are-stiff-competition-homebuyers/
https://www.realestateconsulting.com/the-light-200-companies-revolutionizing-housing/
2018 & 2019 Housing Report:
https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/
The Impact Of Single Family Home Buying:
https://ideas.repec.org/a/gam/jsoctx/v8y2018i4p93-d171162.html
CoreLogic Survey:
https://www.corelogic.com/intelligence/special-report-investor-home-buying/
Federal Reserve Survey:
https://www.federalreserve.gov/econresdata/feds/2015/files/2015084pap.pdf
Redfin On Cash Buyers:
https://www.redfin.com/news/all-cash-home-purchases-smallest-share-since-2007/
Institutional Buyers:
https://www.rentalhomecouncil.org/wp-content/uploads/2021/04/SFR-Get-the-Facts.pdf
BlackRock on Federal Reserve:
https://www.reuters.com/article/uk-usa-fed-blackrock/blackrock-conflicts-managed-extremely-carefully-feds-powell-says-idUKKCN24U38E?edition-redirect=in
New Housing Stats:
https://fred.stlouisfed.org/series/RHORUSQ156N
My ENTIRE Camera and Recording Equipment:
https://www.amazon.com/shop/grahamstephan?listId=2TNWZ7RP1P1EB
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. This is not investment advice. Public Offer valid for U.S. residents 18+ and subject to account approval. There may be other fees associated with trading. See Public.com/disclosures/

What's up real estate, it's blackrock here and in the last few days i have been overwhelmed with non-stop requests to talk about what appears to be one of the biggest and most controversial real estate stories of the entire year. It's the claim that institutional wall street investors and pension funds are behind the skyrocketing real estate prices, while they buy up entire neighborhoods, paying 20 to 50 over asking and then turning them into rentals. Making it unaffordable for owner-occupied homeowners to ever have a chance at finding a place to live. The wall street journal even ran a story the other day, explaining that, if you sell a house these days, the buyer might be a pension fund, then to make matters.

Even worse, rents have just seen their largest year-over-year increase in 15 years, suggesting that maybe there is a serious problem that needs to be addressed and that's leading to the narrative that maybe one day wall street is going to be your next landlord. So here's the deal i have been working full-time as a real estate agent throughout the last 13 years. I own and self-manage. Eight properties myself as a landlord and real estate, is still by far my largest investment.

This is a topic that i am extremely familiar with and when i see headlines like this thrown out, i want to get to the bottom of it with actual facts, data and statistics that a lot of these news outlets tend to miss. And all i ask for in return is just to hit the like button for the youtube algorithm doing that helps me out tremendously. It is totally free and as a thank you for doing that here is a picture of a maltese puppy. So, thank you again and now with that said, let's get into the video alright.

So this all starts off with an article posted last week by the wall street journal with the headline. If you sell a house these days, the buyer might be a pension fund. Now this was all sparked off by the sale of a newly built subdivision north of houston, containing 124 newly built homes, but these houses were not sold off one by one to individual homeowners. Instead, the entire lot of them were sold to the property, investing platform fundrise for 32 million dollars, with the intention of putting up the entire community for rent and in return for that, the home builder said that they made twice as much as they would selling houses To the middle class, this article even goes further on to say that yield chasing investors are snapping up single family houses to rent out or flip, while they compete with ordinary americans and drive up the price of homes, and then they go and throw out a statistic That one in five homes are bought by somebody who never moves in now, as you would expect in an already heated housing market.

This story went absolutely viral, making its way through multiple news networks outlets and then, finally, where stories go and they want to get people really triggered twitter. This user cultural husbandry retweeted the article with his own caption blackrock, is buying every single family house. They could find paying 20 and 50 above asking price and outbidding normal home buyers. He then goes on to say that home equity is the main financial element that the middle class families use to build wealth and blackrock.
A financial reserve, funded financial institution is buying up all the houses to make sure that young families can't build wealth. Let that sink in for a moment got it you're, using your tax dollars to mess over the lower in the middle class and it's permanent and then, of course, he winds down with another few dozen tweets about the great reset and selectively optimized articles to validate his Argument but a totally separate report shows that investor sales have actually increased by up to 65 year-over-year, making up about 20 percent of the total u.s housing volume. So there is definitely something to be said about the state of the real estate market that makes it extremely unaffordable for anyone who does not have an endless stream of money at their disposal. So let's actually go ahead and fact check all of these claims and see just how much truth there is that blackrock is buying houses for 20 to 50 above asking through receiving tax dollars to screw over the middle class and that slowly but surely wall street is Taking over the single-family housing market and turning america into a renter nation, because when it comes to claims like that, if this is true, we're, probably pretty all right.

So, let's start off with the first claim: blackrock is buying entire neighborhoods at 20 to 50 percent. Above asking, this obviously stems from the wall street journal article cited here, referencing the sale of a 124 single family subdivision for 32 million dollars. With the statement we certainly wouldn't expect every single family community we sell to sell at a 50 gross margin, so right off the bat, it's really easy to think wow, so institutional investors are buying up entire neighborhoods and paying 50 over asking you're taking inventory off the Market that everyday buyers could have so desperately used, but if you think that would be correct, i hate to break it to you, but it's not the reality is this entire article has been taken entirely out of context and twisted into a false narrative. That's missing out on quite a few key details, so let me tell you the truth as referenced by the financial samurai, who got the full details from the buyer fundrise after all of these accusations went public now.

This neighborhood in question was a purpose-built rental community, created by dr horton. By the time this project was listed for sale. It had already been completely rented out and it was being sold as an entire package of 124 homes. That was never meant to be sold off to individual home buyers.

In this case, dr horton purposely sought out a high demand area years ago. They developed a community appropriately and their business was intended to be a fully occupied flip. They just so happen to have sold at a time where housing prices have skyrocketed considerably, thanks to record low interest rates, while the entire state of texas has seen a large influx of new home buyers from around the country, and that is how they were able to Create a 50 profit margin, that's not typical, but if you bought a property years ago, you developed it from the ground up you fully rented out each house and you took the capital risk. 50 margins are actually quite reasonable.
So, even though this article makes it seem like wall street is out there buying up entire neighborhoods paying 50 over asking taking inventory away from everyday home buyers and driving up the cost of housing. The reality is these homes supplied much needed rental inventory on the market and they were never meant to be individually for sale. To begin with, fundrise the buyer even came on record to say that they only bid one to two percent more than other leading buyers and that they were selected the winner for their ability to close quickly. Basically, the narrative that wall street is out there paying 20 to 50 over asking is completely unfounded and from every little bit of factual information that i could find, there is not a single thing out there that supports that claim, and i guess instead, i would just Chalk, this up to a misinterpretation of information and a lack of understanding with how profit margins are actually calculated, and i would even go so far as to say that those figures are completely fabricated out of thin air.

But that does not mean that wall street is not writing, offers on single-family properties and then turning them into rentals. So for that we'll continue to go down the rabbit hole of research and get to the truth with what's really going on now. The second claim we'll have to address is that investors make up about 20 of the u.s housing sales. Now again on the surface, when you read something like this, it's easy to make.

It feel like they're, implying that investors are these large wall street type institutions, but when you really begin to look at the actual numbers behind it, you'll quickly see it's not quite as bad as you might think. It is first of all. The real answer is that no investors do not make up 20 of all u.s housing sales. However, they do make up 20 of all low-cost housing sales and, in the mid to upper price points, investors make up only about 11 to 12 percent of all property sales.

But remember the term investor could mean a lot of things and when you see articles saying that one in five homes are not going to primary homeowners, it is a little bit misleading. It's important to keep in mind that if i go and buy a property with the intention of renting it out, i am an investor and i am part of that statistic. If you go and buy a vacation home for part of the year, then you are also part of that statistic. If someone goes and buys a burnt down dilapidated house with the intention of fixing it up and selling it for a profit, they are also part of that statistic.
Now, if you want to know how much institutional investors are buying well, in 2018, a survey found that they accounted for less than one percent of all single-family housing units across the u.s. Then again, in 2019, it was said that institutional investors owned 300 000 single-family units, which represents less than 2 percent of the overall market. Corelogic also found that over 95 of investor activity came from small mom and pop landlords across the lower end of the market, where there just so happen to be a higher concentration of renters to begin with, and that we can't definitively conclude. This increase leads to excess competition for owner occupiers.

Even a federal reserve study found that typically institutions prefer to purchase homes in neighborhoods, where fewer residents can qualify for a mortgage because they don't want to compete with home buyers to pay the top end of the market. Retail value, instead, the institutional investors just want the highest likelihood of finding a renter as soon as possible, with some built-in equity as a margin of error. The only evidence for institutional investors competing with everyday regular home buyers was found by box, who cited an article that institutional investors are stiff competition for homebuyers. However, that article in question contained absolutely no factual data whatsoever to support institutional investors at all and the only circumstantial evidence that they had to support.

These claims was that a recent, first-time home buyer bid on six houses and was outbid six times by cash offers. There was zero evidence that any of those six offers were from institutions, let alone even investors, to begin with, and really for all, we know those six offers could be from owner occupants who had cash or motivated to move in as fast as possible, at least a Redmond press release clarified that in florida, cash purchases are mostly from people who are relocating from other states to purchase a second home or a retirement property and they're, using cash from selling their former homes to purchase something. And if you want to know how many institutional wall street type investors there are buying up single family properties with the sole intention of renting them out the answer: is you ready for this point six percent and there is no state in the entire u.s, where single-family Rental home companies own more than one percent of the housing inventory, then, in addition to that, single-family rental home companies accounted for less than .14 of homes purchased in 2020, and you could bet your bottom dollar that they have no interest competing with you on that overpriced. Three-Bedroom two-bathroom luxury turnkey villa down the street that you've been eyeballing for a week, but then what about some of these claims about blackrock being funded by the federal reserve, with your tax dollars, giving them infinite money at their disposal? Is there any actual truth to that? Because that is quite a big claim.
Well, the truth is that, yes, there is a pre-existing relationship between the federal reserve and blackrock, but not in the way. You might think much of this all started in 2008, when the housing market began to collapse. At the time, banks were saddled with billions of dollars of non-performing loans from homeowners who couldn't afford their payment and they let the home go into foreclosure. At that time, banks needed to unload their entire portfolio as quickly as possible, and that meant that investment groups like blackrock would be able to go in and buy these entire portfolios in mass at a discount with the intention of then fixing them up or renting them Out or selling them for a profit, these were properties that no one else was buying that couldn't be sold off individually, one by one that couldn't qualify for traditional financing that otherwise would have fallen into even more disrepair.

So in this sense, institutional investors acted almost like a floor for the market, preventing it from falling further giving banks, liquidity and creating the demand that would eventually lead to a full housing recovery. In total back then single family rental, home companies purchased approximately two percent of homes sold throughout foreclosures and short sales. That's it and blackrock was in the position to take over very large real estate portfolios that were never meant to be individually added to the market, such as with ing's, 92 billion business and today. Well, it's a little bit more complicated.

Last year, the federal reserve announced that they were going to be buying up corporate debt known as bonds to give money back into the economy. Now, since the fed just can't go and buy those bonds themselves, they have to go through a middleman who could manage those funds on their behalf, and in this case the middleman was blackrock now in theory. The worry here is that blackrock would be able to go and buy their own corporate bonds, give themselves free infinite loans and then go and use those loans to buy investments. But it's worth noting that blackrock waived asset management fees on etfs purchased.

On behalf of the fed and according to the federal reserve, blackrock is just our agent. We make the policy decisions in conjunction with our colleagues and they just execute our plans, and so far, one year later, there is no indication that blackrock is out there buying up their own loans, and under this agreement they would be entitled to the same benefits as Any other company with no preferential treatment at all, therefore, from all the factual evidence that i could find that's not written by a guy wearing a tinfoil hat and using a vpn because he's convinced the government is spying on him. There is just zero evidence that blackrock is bailing out its etfs with fed money, while taxpayers eat the losses. It's understandable that people are angry and it's really easy to blame.
A nameless, faceless wall street institution is the root cause of all the issues, but truth be told you want to know who's driving up the housing market. Well, it's literally everyone looking to buy a house right now, who's incentivized to go and buy real estate, because interest rates are really really cheap. That's it just think about this rationally for a giant multi-billion dollar corporation, like blackrock, taking the time to compete with 20 offers on random residential neighborhoods across the us would be a logistical nightmare for them. It just doesn't make any sense, and in order for them to actually make a profit, they need to operate within the economy of scale and have the infrastructure already set up well in advance in order to make offers keep properties rented and make sure they're repaired.

Instead, institutional investors are way more likely to develop their own subdivisions in scale with the intention of purposely building out to rent long term. This way they could keep all of the profit to themselves. They pay significantly less than it would cost to buy each of those homes individually across the us and they're able to maintain quality control from start to finish. The urban institute also said that there really isn't any evidence in our research that institutional investors led to higher rents or greater eviction rates for a sample of counties tracked through the recovery, meaning institutional buyers are not responsible for the current state of the housing market or The largest rental increase in the last 15 years, the data to support this is also really obvious, with actual home ownership rates having increased at their fastest level ever in history in 2020..

Unfortunately, though, this entire story is really just like a bad game of telephone which slowly got warped and distorted, as it was passed on from one publication who covered another publication, who covered another publication until eventually straight-up misinformation is spread by people on twitter, who have absolutely No idea what they're talking about so those are the facts and for anyone wanting to learn more, i will list all of my verifiable sources down below in the description for you to see. And lastly, before we end, i just want to say a huge thank you to blackrock for sponsoring this video just kidding guys. That was a joke, but seriously guys if you enjoyed this video and you find it helpful. Just do me a huge favor.

All i ask is that you hit the like button and, if you guys are feeling extra generous feel free to get your free stock down below in the description that is now worth all the way up to 70 dollars. When you sign up for public it takes. You just a few moments. You may as well get it it's pretty much like free money and enjoy.
.

By Stock Chat

where the coffee is hot and so is the chat

26 thoughts on “The housing market just went negative”
  1. Avataaar/Circle Created with python_avatars Kpaige4 says:

    Graham, can you address the difference between black rock and black stone? Someone was telling me you have it wrong and that it is actually black stone that is doing the alleged scandal buying. Black stone was a company that broke off of black rock. I have no idea and would love your opinion on it.

  2. Avataaar/Circle Created with python_avatars Pretty K says:

    I made an offer on a house I really wanted. The other buyer offered the seller 5k cash up front and I lost the house. I mean is this even legal? I was so upset

  3. Avataaar/Circle Created with python_avatars David Schulman says:

    I think its hard to tell. Zillow for example doesn't buy off the MLS. I think they often resell to larger investment companies and probably has a good volume for investors. But you are probably right that the sky isn't falling because of blackrock.

  4. Avataaar/Circle Created with python_avatars Lucy says:

    If your going to spew corporate wallstreet propaganda your not worth listening to or watching

  5. Avataaar/Circle Created with python_avatars Flimsy Fox says:

    Important note about reporting:

    If you don't know its validity, assume it's false. It's fine to entertain the possibility of that information being true, as long as you tell your audience that its validity is at best unknown.

  6. Avataaar/Circle Created with python_avatars Christopher G Man says:

    How is anyone able to afford a apartment and save up to buy a house… just wondering here single dad making 50k a year 🤔it hasn't been easy since most of my income goes to rent

  7. Avataaar/Circle Created with python_avatars James Corry says:

    My home is up 100K in the last year. Absolutely insane time to own a home if you had it 12+ months ago. Prices will not be dropping any time soon.

  8. Avataaar/Circle Created with python_avatars Nate Larson says:

    Love the "endless stream of money" gif. Also, first time watching: Did Mr. Stephan get his real estate license when he was 7? : D

  9. Avataaar/Circle Created with python_avatars La Verdad Buscador says:

    Graham "however investors do make up 20% of all low cost housing sales"

    Bro, THAT IS THE PROBLEM!
    Those low cost homes that need fixed up are what USED to be called "starter homes". If investors take those off the market and all we're left with is higher end homes and rentals……those investors basically destroyed the American dream for your average buyer.

  10. Avataaar/Circle Created with python_avatars Jamia Shute says:

    Say you’re getting sponsored by black rock , without saying you’re getting sponsored by black rock.

  11. Avataaar/Circle Created with python_avatars nfzeta says:

    Also, given that these institutions usually have the resources to build homes in new areas this also decreases the likelihood of people building for homes in lower cost areas as what's left is usually the high cost, close to hand locations.

  12. Avataaar/Circle Created with python_avatars Zack K says:

    Graham, can you do a video on your opinion of 'Better Mortgage'? I found the site this morning and it seems very transparent and that makes me feel comfortable.. almost so comfortable I want to go out and buy a house in this wild market.

  13. Avataaar/Circle Created with python_avatars CARLOS AVALOS says:

    Correct me if I’m wrong, but all I heard was: it’s ok, Wall Street is not buying my/our luxury homes; they’re only buying up housing for lower-middle class to poorer Americans. The US may not be a renters country for you but it is for millions of America financially forced into a renters country that you also profit from.

  14. Avataaar/Circle Created with python_avatars LucyBoo says:

    Hi Graham! I was wondering if you could explain how some builders for new homes aren’t able to lock in your price? I’m in Texas btw if that makes a difference. I’ve had a couple of friends so far that have decided to go with another builder because their original builder couldn’t lock in their price even though they’ve been to the design center. The price kept rising and they stated they will be able to officially sell and lock it in a later month.

  15. Avataaar/Circle Created with python_avatars Taylor Bostic says:

    Can you tlak about the best ways to invest in real estate right now even with the market plummeting?

  16. Avataaar/Circle Created with python_avatars Amiles Etienne says:

    So the concern i had was that contractors are building homes with investors in mind. Not an average, family buying a home. That there is more people buying houses and investors, its pretty bad. I want to preface this by saying I live in Arkansas. The rental association is awful here and right now, there is a movement into a rental society where I currently live.

  17. Avataaar/Circle Created with python_avatars LVPAT666 says:

    ++++++👍. If you want tin foil hat to be bunk, read the nonsensical, information with charts for “proof”, almost any YouTube precious metal channel.
    Conspiracies and false information almost hard to believe but it’s a cult.

  18. Avataaar/Circle Created with python_avatars Ikdulo says:

    Looks like I'm going to live in a van down by the river. What with how expensive houses are going to get.

  19. Avataaar/Circle Created with python_avatars Sky Moon says:

    No, it quite bad as what we think. But I agree that it's not about Wall Street, but Chines buyers. I think Chinese investors are all into buying houses in major US cities.

  20. Avataaar/Circle Created with python_avatars Adam Hering says:

    So buy low sell high and when the bottom drops out wait for them all to be bailed out by the working class. To bad a house costs more than GameStop shares.

  21. Avataaar/Circle Created with python_avatars Yuvia Mendoza says:

    Small Mom and Pop landlords are still a huge problem. I understand if you want to own a small duplex, but owning multiple houses is what has caused a housing shortage since the beginning of capitalism. We would have enough houses for everyone in America to live if there were no landlords.

  22. Avataaar/Circle Created with python_avatars Svetlana Dreher says:

    Real estate investor who rents houses denies claims of investors/institutions buying properties to rent out and jeopardizing the ability of middle and lower class to buy property… How surprising lol still love your channel Gram but we need more long-term perspective on this not just "last year it wasn't true"

  23. Avataaar/Circle Created with python_avatars Dineo O'Brien says:

    I was able to build a big income stream during the covid-19 pandemic investing with a professional broker,Mrs Elizabeth Graham, I have been making huge profits on my investments ever since i started trading with her, Mrs Elisabeth Graham's trading strategies are top notch.

  24. Avataaar/Circle Created with python_avatars WTP WTP says:

    I think you're missing the larger picture that builders & investors (institutional &/or wealthy) are by far & wide creating an increased rental (non-ownership) nation. This perpetual rental/leasing trend spans across markets including computer software, transportation, etc.

    You sound like an apologist by excusing, or uncritically accepting, the massive bailouts after the 2008 crash that went to Wall Street rather than Main Street, which left many of the homes at the time empty, & by saying that many of the current single family homes were much needed rental properties, or that institutional investors simply could close faster, rather than looking at the larger picture of this long trend away from ownership feasibility to begin with. And, this trend toward institutional/wealthy buying up of properties to rent/lease trend keeps pushing up rents to insane levels to maximize profit as much as possible.

    True "Mom & Pop" owners/"investors" of days old who mainly wanted good tenants & a fair enough return on investment are extremely rare animals any more. From my experience, as a renter, with institutional or wealthy owners over the past decade, it has become all about chasing the highest possible rents they can squeeze from renters.

  25. Avataaar/Circle Created with python_avatars samoa joe says:

    Mrs Jane is legit and her method works like magic I keep on earning every single week with her new strategy❤️

  26. Avataaar/Circle Created with python_avatars Robert says:

    Your parents bought a house when they were in their 20"s at the cost of about a 1-2 years of income. Fast forward 40 years and houses are now 10-20 years of income. Let that sink in for a second.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.