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Today’s Entry: Having read what you stated about rents and homeownership my question is this; Are we able to find how pervasive Blackrock Group’s purchases of homes etc., in Florida are?
Bottom Line: There’s no doubt institutional investors have become a major part of Florida’s real estate market. It’s also true Blackrock is the most aggressive of the bunch. There’s also no doubt the sizeable share of Florida’s housing market they’re accounting for is in part responsible for the ever-rising prices for homes and rent rates. What you might be surprised by is how little has changed in this regard.
CoreLogic regularly updates info on the “Share of Home Purchases made by Investors”. This data includes all home purchases made by known investment companies. Over the past decade, 20% of the residential real estate market is what they're accounted for. That’s right, a fifth of total real-estate sales. Again, that’s become the norm. Big-time institutional investment firms like BlackRock first stepped into the residential home market in a meaningful way over a decade ago during the housing crisis within the Great Recession. At the time they stepped into the market, especially in South Florida, it proved to be a huge help in turning around what had been a three-year collapse of the housing market in South Florida.
Many of the foreclosures which had gone into disrepair were snapped up and fixed up providing an underpinning to our real-estate market allowing it to stabilize and eventually turn around. While institutional investor involvement was widely viewed as a positive a decade ago, its become anything but since. Now, has something recently changed, or are we just more aware? Also, is there really something to BlackRock’s involvement specifically that’s driving our market higher? The answers to those questions are yes and yes. But there’s also a whole lot more to that story.
According to the most recent info from CoreLogic, the institutional influence in the housing market is up to about 27%, that’s a 35% increase in their buying activity over the past year. It also means that home buyers are bumping into institutional buyers over a quarter of the time. It’s not quite the highest on record, in 2013, the big boys accounted for over 29% of the market at one point but it is the largest share of the housing market they’ve accounted for in about nine years.
Specifically to BlackRock and why they’ve made the news as a big player in South Florida’s rental market specifically. Last summer BlackRock bought the property rental company Home Partners for $6 billion. The company which specializes in rent-to-own housing has been rapidly expanded by BlackRock in recent months and is the most aggressive of any of the institutional investors in South Florida’s housing market. As for how that’s playing out in South Florida specifically, here’s the percentage of the housing market comprised of investor purchases by county.
So, there’s obviously a huge difference based on location within South Florida, with Broward and Palm Beach County experiencing below-average institutional activity, while Miami-Dade is seeing some of the largest investor buying in the country. Now given that housing prices and rental rates have been rising as fast in Broward and Palm Beach County as in Miami-Dade most recently, there’s another dynamic in play. And it's the biggest dynamic that’s influenced our housing market over the past year, second/vacation home buyers.
According to Redfin, demand for second home purchases has surged by 178% over the past year. That’s not a mistake. I really said demand for second/vacation homes is up 178%. Btw, that’s the national average. Given that South Florida was already ground-zero for second and vacation homes nationally, the explosion of demand since the end of the lockdowns has created the frenzied effect we’ve seen in South Florida’s market. The combination of low inventory, investor involvement but especially exploding demand for second houses is what’s driving our housing market.
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