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Harbinger of things to come

10/5/16       
Cabmaker

Today's Wall Street Journal ran an article about how the six largest home buyers in America have accumulated over $28 billion worth of houses since the crash. The sixth largest firm in this niche owns 31,000 houses. Blackstone Group for a time spent $150 million dollars PER WEEK buying up this real estate.

These houses are being bought then rented out. Eventually these REITS will own every single residence that comes on the market. This will only take one or two generations to accomplish.

This will have a dramatic effect on custom cabinet shops that sell into the residential market. Renters don't remodel their kitchen.

It might not be noticeable this year or next but eventually this will be on everybody's radar.

Click the link below to download the file included with this post.

A_Onetime_Housing_Skeptic_Plans__1_Billion_Bet_on_Homes___WSJ.pdf

Starfishes devour every mollusk

10/6/16       #2: Harbinger of things to come ...
dub

Interesting article. Looking up a few of the REITs websites, I searched for rentals in my area. All of the houses were in the “affordable neighborhoods”. As a custom cabinet shop, this isn’t our target market. Owner occupied or rental, any projects will most likely be stock cabinets. Over time this may prompt stock and semi-custom lines to move up market, but the REITs may also choose to remodel more often than a typical homeowner in order to maximize rents. This would be a positive change.

Thanks,

dub

10/6/16       #3: Harbinger of things to come ...
Pat Gilbert

I think that trend has peaked. As has multi family units.

The future is gong to be single family homes.

The interest rates figure to stay down for a long time.

The demographics are going to grow in the next business cycle.

10/6/16       #4: Harbinger of things to come ...
Tom Henry Member

I work for the top 4-5% of residential construction. While they slowed down a bit to count all their money flowing in during the Crash, they are historically very strong and growing. These are the folks buying $150million a week....

What say you about their future? Is the crystal ball cloudy or clear?

10/7/16       #5: Harbinger of things to come ...
Pat Gilbert

From what I read REITS and Multifamily were driven by the housing crash and people needing to rent.

The first chart is an extreme but that is the trend.

The second chart shows slowing in multifamily units.

The next business cycle shows there will be a strong demand for single family units and IMO REITS and multifamily will slow down.

The form that demand takes may be much different than what we have seen in the past. E.G. different locations with cheaper land, manufactured housing, no longer a need for garages, who knows?


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10/7/16       #6: Harbinger of things to come ...
dean c

just wondering, Pat
do you post on the Tom Woods elite facebook page?

10/7/16       #7: Harbinger of things to come ...
Pat Gilbert

Yes, you don't think there would be two people named Pat that posts this sort of crazy stuff do you?

10/8/16       #8: Harbinger of things to come ...
dean c

Nice!

10/10/16       #10: Harbinger of things to come ...
Tom Goodman  Member

I read about Blackstone in '09 or '10. The article I read was about how Blackstone wanted to "monetize" (sp?) their rental incomes like banks monetized mortgages. Not illegal but hateful and low down, IMHO. Are they betting against themselves? Is there another "Big Short" in the works? Probably.

10/10/16       #11: Harbinger of things to come ...
Pat Gilbert

No Big Short in housing.

The short answer for the last one was the inability of the borrowers to pay the debt.

Liars loans, abuses of HELOCs, the CRA, a bubble mentality created by Greenspan, stupid crap by AIG.

There is none of that now. The people who have mortgages are very qualified to pay back there loans.

The best candidate for a bubble this time around was the oil wells but it did not happen.

Over investment is always the cause of a recession. However that does not make it a bubble.


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