The overheated market in the housing sector has forced another institutional investor to step back. Blackstone Inc.-owned single-family landlord, Home Partners of America, will stop buying homes from 38 US cities.
According to Bloomberg News, Home Partners, which was acquired in June 2021 by Blackstone Inc. for $6 billion, has told customers it is pausing applications and property listings. From September 1, it will cover areas such as California, Tennessee, Memphis, Idaho, Boise, Fresno, and 25 other areas. From Oct 1, the company will go on hiatus in another ten cities.
Home Partners announced on its website that it had assessed several factors like appreciation in home prices, state regulations, and market demand. These were the guiding factors regarding the investment plans to serve the customers well. The company hopes to resume operations in those areas in the future.
A statement issued by Blackstone said that they, along with Home Partners, will continue actively in 20 of the highest growth markets in the US. The pause in operation in 38 areas represents only 5% of the recent activities.
Convert Tenancy to Ownership
Home Partners operates in more than 80 areas in the US. It is different from other single-family landlords as it designs home deals that allow tenants to have homeownership. If approved, customers can submit homes they would like to buy. Home partners purchase the property in cash and rent it out to customers who get the rights to buy them after a certain period.
The announcement says, as per the new policy, those customers who are approved for the program but do not submit a home they would like to buy later within a cut-off date will be withdrawn from the program and their application fee refunded.
The US housing market reached frenzy in the first half of 2022. Home Partners is not the first largest institutional investor to back out. Other landlords, such as KKR &Co.’s My Community Homes, American Homes 4 Rent, and Invitation Homes Inc., have slowed their purchases because of rising financing costs and home prices.
According to the Home Partners website, the company is not purchasing a home in Minneapolis-St. Paul suburbs of Maple Grove and Champlin. The new regulations passed by municipalities of both these suburbs made it harder for single-family landlords to purchase. The company continues to operate in the suburbs of other twin cities.
