Blackstone-Owned Landlord Pauses Buying Homes in 38 Cities
- Big landlords snapping up thousands of homes during the COVID-19 pandemic are hitting the brakes.
- Home Partners of America, owned by Blackstone, said it would suspend home buying in 38 cities.
- Investors expect house prices to fall later this year and are waiting for better deals.
Big landlords who bought thousands of single-family homes during the COVID-19 pandemic are hitting the brakes, waiting for the housing market to cool.
The latest example: Home Partners of America, a subsidiary of Blackstone Inc., said it would suspend home buying in 38 of the more than 80 markets it operates.
Home Partners, which owned more than 17,000 rental homes in the U.S. as of last year, told clients that as of Sept. 1 it would stop buying in 28 markets including Boise, Idaho; Louisville, Kentucky; and Detroit, Michigan, according to announcement on its website. On Oct. 1, the company will stop buying homes in 10 additional markets, including Albuquerque, New Mexico; Charleston, South Carolina; and Tucson, Arizona.
According to an announcement on its website, Home Partners considers home price appreciation, state and local regulations and market demand when deciding which cities to temporarily drop. First reported by Bloomberg.
“We and Home Partners remain fully committed to expanding access to homeownership and continue to actively purchase homes on behalf of our residents in more than 20 of the fastest-growing markets in the United States,” a Blackstone spokesperson told Insider. “We are pausing markets that account for less than 5% of our recent activity.”
Other major landlords are also cautious about what and where they buy
Corporate owners like American Homes 4 Rent and Invitation Homes, which own tens of thousands of properties, also say they’ll be more choosy about buying as they wait for better deals later this year and early next.
Buyer demand for homes has waned, which often gives these big companies an opportunity to buy units. But home prices are still high, and landlords need to ensure they can charge enough rent to justify the high purchase price. Borrowing costs for big companies have also increased due to the Federal Reserve raising interest rates, another reason these companies may want to wait for conditions to change before buying more.
Blackstone acquired Home Partners for $6 billion in June 2021. The rapid expansion of the single-family home rental industry during the COVID-19 pandemic has alarmed critics who say the companies crowd out regular buyers and raise rents.
But unlike most single-family rental companies, Home Partners specializes in rent-to-buy programs, in which tenants have the opportunity to buy a home for a predetermined price. The company works with individuals to buy homes that tenants want to live in long-term, then sets rents for up to five years and pre-determines the purchase price.