This doesn't make a lot of sense to me. Why would an entity trying to maximize profits pay an extra 20-50% to purchase an illiquid asset?
Cities can counter this by allowing more new construction but backfilling Single Family Residences requires land and that may not be readily available within certain commute distances.
Edit: which is common in desirable places with lots of well paying jobs.
There are cheap places to rent and buy in the fly over states but not as much opportunity, hence the price
Lack of food can be fixed in a day. Lack of housing can be impossible to overcome ever.
Both things could be fixed in a day. Also, both of them could be impossible to overcome ever. What's the distinction you're trying to draw. If it comes down to an acute situation where I had to choose, I (and most I think) would choose to eat. I understand in the real world, there probably wouldn't be such a clear choice.
Not when all the jobs in that household are here.
> People are not surfs and are not trapped or stuck living in a house they can't afford.
They are when all the jobs in that household are here.
> It might not happen overnight but populations do migrate due to housing costing too much.
People who are facing homelessness this year aren't thinking about market corrections that are decades away.
They along with others are trying to build a monopoly/oligopoly in housing. Naturally we would expect regulations against this, but the fact that it's going this far is a bad sign.
"In 2016, with the real-estate market heating up in metropolitan areas across the country, single-family rental companies also started pushing the limits of how much they could raise rent every year. American Homes 4 Rent raised rents by 11 percent between 2016 and 2018; the average rents in the top 30 markets in the country increased by just 6 percent over the same time, according to Zillow. American Homes 4 Rent owned 70 percent more properties in the first nine months of 2018 than in the same period in 2014, but it collected 150 percent more rent. “It’s up to us to educate tenants in a new way that there will be annual rental rate increases,” David Singelyn, the CEO of American Homes 4 Rent, said at an investor’s forum in 2017. “This has been a very passively managed industry for 30, 40 years, up until the institutional players came in.” [1]
[1]https://www.theatlantic.com/technology/archive/2019/02/singl...
The general thrust that institutional investment groups have increased their purchasing of single-family residential homes over the last decade is true (around 20% to 25% of all such transactions now, IIRC). And it may be true that such buyers are pushing up home prices in many areas. I haven't done any analysis of that so I cannot comment on it.
However, the tweets are ... not quite correct. First off, the transaction in the article was a deal where Blackrock purchased a set of 124 rental properties that was already owned by an institution (D.R. Horton). It was this complex https://www.amberpineshomes.com/floorplans. The seller is quoted as saying "We certainly wouldn’t expect every single-family community we sell to sell at a 50% gross margin", which isn't the same as 50% above asking price. Various groups bid on the complex and, from another linked article, all bids came within a few % of each other. Any seller would hope to sell with some sort of positive gross margin. The seller's statement indicates that 50% may be high for residential real estate and thus is an indicator that the market in that area is quite hot.
The average price per home in the deal was $258k. Perhaps a bit high given the average size in the complex, but... If you examine the location (because real estate is all about location), we're talking about a small town outside of Houston that has grown in population from 56k to 91k between 2010 and 2019. The median family income there in 2016 was $60k. So this looks like a high growth area with upside potential.
The buyers are probably making a bet that the homes there will see substantial appreciation in the future because of this growth. The seller probably either wanted the cash injection, didn't want to manage rentals anymore or otherwise prioritized some short term concerns over long term asset yields.
To sum up, the people at Blackrock is not stupid. They won't pay a premium everywhere. They'll only do it in areas where their analysis shows that they will make it back along with a substantial profit. Is this good for society as a whole? Perhaps not. But that's not their problem.