Jonathan Grey is a lying scumbag. He is attempting to deceive readers into believing the housing market is experiencing a healthy recovery and his slimy firm’s 80% REDUCTION in purchasing foreclosed homes from their co-conspirators at the Too Big To Trust Wall Street banks is not really sending a message that Blackstone sees the writing on the wall. Their scheme to drive up prices by limiting inventory and then pretending to be long-term landlords has enriched themselves and their Wall Street cronies. It hasn’t helped the average American or first time home buyer, as prices and higher mortgage rates have made it impossible for people to afford to buy. They get to rent from Blackstone, the Wall Street slumlord.
This douchebag is laying a smoke screen so that his firm can start selling before the muppets realize what is happening. Prices have peaked and are headed down again. The only thing propping up prices were these hedge funds buying. Mortgage applications are at two decade lows. Someone should tell Jonathan that his Wall Street cohort lemmings all did the same exact thing. And they have all stopped buying. They will all be heading for the exits at the same time. And there are very few muppets left to buy their decaying rental houses. The brilliant Ivy League MBA’s didn’t think too hard about their exit strategy. The next two years should be quite entertaining.
This lying prick actually has the balls to blather on about how the housing recovery is self sustaining and strong. Does this look like a strong housing recovery?
Wells Fargo, Citicorp and JP Morgan, along with Bank of American account for more than half the mortgages in the country. They are all reporting 75% lower mortgage originations than one year ago. This is what Jonathan considers an improving housing market? This guy is scared shitless. While he is lying to you, he is desperately trying to unload his portfolio of decaying rental homes on flippers and fools. Watch what he is doing, not what he is saying.
Blackstone to slow down home purchases even further this year
Blackstone Group will continue to slow down the pace of its property purchases this year as the supply of ultra-cheap real estate thins out, an official at the private-equity firm tells MarketWatch.
In July Blackstone’s Invitation Homes unit, which Bloomberg estimates is the country’s largest single-family rental business, hit its peak purchase pace of about $125 million worth of homes per week. Since then, the weekly pace has dropped to about $30 million to $40 million, and will fall further this year as it likely becomes tougher to find attractive deals.
“It’s not going to get larger. There’s less and less distressed housing,” said Jonathan Gray, Blackstone’s global head of real estate. “We have slowed down [buying] significantly in a number of markets as a result of prices going up and less distressed” inventory.
But it’s worth noting that despite the expected slowdown, Blackstone
/quotes/zigman/459729/delayed/quotes/nls/bxBX is still making residential purchases. Invitation wouldn’t continue to buy homes, and spend an average of $25,000 per property on renovations, if the firm didn’t expect to enjoy real appreciation as demand builds but housing inventory remains relatively low.
“We still see a number of years of pretty good [home-price] growth. There’s definitely room for more appreciation. We think home prices will do better than most people’s expectations,” Gray said.
Blackstone’s buying is currently concentrated in Miami, Tampa, Orlando, Atlanta and Seattle.
According to the most recent monthly report from RealtyTrac, an online foreclosure marketplace, institutional investors made up 5.9% of all U.S. home sales in February, down from 7.2% a year earlier. There’s been concern that with investors scaling back home buying, there won’t be enough purchases by prospective first-time buyers to fill the gap, as young families struggle with a choppy jobs market and high barriers to obtain a mortgage. However, Gray said the housing market’s recovery has legs.
“We are an increasingly smaller and smaller part of the story now that the recovery has plenty of momentum on its own,” he said.
–Ruth Mantell
Great story. I guess that Blackstone dumbshit forgot what happened in 2007/2008. People were buying and flipping homes, then the music stopped, and all the chairs were gone. People got stuck holding the bag as their properties went down 50% in value. It was called the housing crash, and this time the hedge funds will be left holding the bag as their properties go down 50% in value, if not more. They’ll be bankrupt, unless Obama bails them out, which is the most likely scenario.
The government’s dalliance into usury (Student loans, sub-prime car loans, and mortgages), along with the Fed’s free money, has created another housing bubble. This time, however, the dupes aren’t people that can’t afford the homes they bought, it’s the hedge funds and foreigners. It’s going to be fun watching them squirm as housing collapses.
Talk about a “no bid” market, there’s nobody to buy homes, no jobs to support home ownership, and an entire generation already up to their eyeballs in student loan debt. And as the stock market crashes, boomers will be desperate to cash out their homes as their stock wealth evaporates. All the makings of another housing collapse, only worse this time as there will be no buyers.
FORTUNE — If you are wondering why you can’t get a mortgage, here’s an answer: Every time JPMorgan Chase makes a home loan, it loses money, $1,500 on average. That might not make JPMorgan want to make so many loans.
That helps explain why banks are lending so little, and why the housing recovery, which seemed to be zooming along just a few months ago, has begun to falter. It also may say something about the sluggish economic recovery.
On Friday, JPMorgan (JPM) reported its first-quarter earnings. They were less impressive than analysts were expecting, in part because loan growth at the nation’s largest bank in the country has evaporated. JPMorgan had $730 billion in loans a year ago. It has the same now. Deposits are still rolling in. Typically, a bank makes money lending out the money it takes in from depositors and pocketing the difference. But JPMorgan is now lending out just 57% of its deposits. It used to be more like 80% a few years ago.
Signing up borrowers was never the most profitable part of the mortgage business. The bigger profits came from collecting the interest on the loans, or selling those loans off to others. But it was never a loss leader, either.
A year ago, for instance, JPMorgan made about $750 per loan. The year before that, it booked $3,300 of profits for every new loan.
But then, about a year ago, interest rates began to rise for the first time since the financial crisis. It wasn’t much, around one percentage point, but it was enough to crater one of the few businesses for the banks that had come roaring back. And the housing market remains fragile. All of a sudden, all those people who were rushing into refinance their mortgages every time rates dropped stopped coming in.
JPMorgan funded $53 billion in mortgage loans in the first three months of 2013. That shrank to $17 billion in the first three months of this year. And JPMorgan is based on being big. The result is that you don’t just make less when you make fewer loans. You make nothing. A year ago, JPMorgan earned $500 million in the first quarter from originating home loans. In the first three months of 2014, it lost $200 million.
There never was a recovery in housing sales, so the increase in prices was 100% unjustifiable.
How many different “experts” were trotted out in ’07/’08 as the black flags kept popping up and the talking heads were determined to speak valuation into the market.
Deja’ vu, oh how I know ya’.
@AWD, funny shit on the mortgage stuff.
The reason the banks aren’t lending money is that they can “earn” oodles and oodles of guilt-free, less gubment regulated, funded by the fiat printing of Yellen, and the prolifigate spending of CONgress, “profits” without actually helping America
The other reason is that when we moved our production to China, we moved the jobs capable of supporting this overpriced/overvalued housing market with it.
No shit. Unless their are family-supporting, inflation-beating, jobs available for the masses, everything is going to slowly shrink. Until it implodes
Meanwhile, the banks will still be blaming it on everything but the freaking truth. Same as our fearless leaders. Whom happen to be one and the same when you get down to it.
Fiat on.
Hey AWD, brilliant analysis in that 1st comment.
I’m going to have to use it and give u credit.
People don’t understand that U don’t need a fancy degree like Bubbles Bernanke to be a real economist – just a dislike for government, common sense, math skills, knowledge of history, and pay attention to what happens in the real world.”
If there is a God, Blackstone will go bankrupt.
The one key difference I see in our area is that the inventory as stated in these articles is quite low:
http://www.landmarkweb.com/2014/01/16/remax-of-new-england-forecasts-inventory-shortage-coupled-with-rising-interest-rates-in-2014/
http://www.boston.com/business/news/2014/02/25/mass-home-prices-rise-low-inventory-continues-plague-the-market-the-warren-group-says/95E9RIrCS7nXMlfIugwnyK/story.html
Interesting anecdote, a friend of ours has a beautiful home (he’s a builder) on the market in the high $600,000 range, very little activity in this range unless it is new. The $450,000 to $500,000 very active if you can find any inventory in our south shore town. It appears people do not want to get into these big homes with expensive mortgages. The problem with anything new are that the land costs are so high that new construction often starts in the mid $600,000 and the competition for is quite aggressive in this tight market. Ironically we have sold out of one of our million dollar developments, and are on the verge of selling out another. almost all cash buyers.
Bob.
Bob.
he’s a billionaire on paper. i’m sure he loves the peasants.
http://en.wikipedia.org/wiki/Jonathan_D._Gray
A Steve Hogan Blacksotne will not go bankrupt they are increasing assets under management at a astonishing rate which means more management fees and if they do well in their investments carried interest and performance fees. They have turned from a private equity firm into a alternative asset management firm with different asset classes such as Private Equity, Real Estate, Fund of Hedge Funds, credit via GSO Capital Partners who are giving loans where the banks have retrenched aka shadow banking. I don’t think Stephen Schwarzman will let it go bust and Joe Baratta and his private equity division will think of something to save the day.
Will take another perfect storm for BS to BK. Has happened b4 and will happen again.