By Matthew Goldstein
Institutional money keeps rushing into the market for foreclosed homes, with some big players snapping up homes at breakneck speed. But the question is whether the big buyers are throwing money around indiscriminately and Wall Street’s big housing long will come up a bit short.
The other day Bloomberg reported that Blackstone Group has already spent $2.5 billion to buy 16,000 homes to manage as rentals and eventually sell them when prices appreciate high enough. Blackstone says it’s finding that the going price for homes sold at foreclosure auctions and out of bank inventories are rising quicker than anticipated.
But Blackstone, which some believe could spend up to $5 billion on single family home space, isn’t alone in racing to snap-up foreclosed homes in states like Florida, Georgia, California, Nevada and Arizona. American Homes 4 Rent, a firm that has $600 million from the Alaska Permanent Fund, is buying up hundreds of homes a month, industry sources say. Colony Capital, the other big institutional player is no less aggressive.
Other significant players also are still appearing in the market.
Private equity shop Apollo Global Management is committing hundreds of millions to the market and partnering with several firms that specialize in acquiring and operating single family homes. People familiar with what Apollo is doing say it’s a less aggressive approach than the one taken by Blackstone. In one partnership, Apollo is providing financing to Calif.-based Haven Realty Capital and has begun buying homes in Las Vegas, for instance.
Don Mullen, a former Goldman Sachs executive who helped design the firm’s subprime mortgage trade, has raised at least $170 million for his foreclosed home fund with the help of Goldman’s wealth management group, which is marketing the fund to its wealthy customers. Mullen’s fund also began buying homes a few months ago in Las Vegas and Florida.