Categories: Featured News

Tough Questions Arise Out of An Unprecedented Affordability Crisis

Talk about staying ahead of the market. The real estate boom has created an emergency-level affordability crisis across the nation. So, news that Blackstone Real Estate Income Trust Inc. acquired affordability innovators Home Partners of America in a deal worth $6 billion is not so surprising. However, the puffy cloud with the silver lining investors are enjoying these days casts a dark shadow. A widening of the gap between rich and poor is something few market analysts are discussing. 

A dystopian cityscape – Courtesy TORLEY

First, the deep pockets at Blackstone will reap the benefits by tapping into the almost 20,000 homes Home Partners of America holds on behalf of residents who cannot or are not ready to purchase. Also in Blackstone’s announcement is the mention of Home Partners launching a program called Choice Lease, which aims to remedy affordability challenges. Jacob Werner, BREIT senior managing director, was quoted saying:

“The fundamental premise of the HPA platform is to provide residents with the opportunity to live in their chosen home with the option to purchase it–we intend to build on that goal and expand access to homes across the U.S.”

Blackstone’s shares went up more than 1% on the announcement and no wonder. In the Atlanta market, for instance, prices are going up by 1% every month. Homebuyers are resorting to paying way over market value or even asking price in some cases. On the darker side of the whole affordability issue, Atlanta Habitat President and CEO Lisa Gordon told WSBTV2 News recently that some 350 families are on their waiting list for affordable homes. There’s a huge problem and a great opportunity coming out of this crazy housing boom. 

On the other side of the country in San Jose, California, Roygbiv Real Estate Development is working to create 1,000 affordable homes east of downtown in high-rise developments. Residents will get access to common open areas on the first floor of each building and roof decks along with other gathering areas in those developments. But, the term “affordable” starts to sound like an America made up primarily of dystopic high rises to house the workforce. From Palm Beach, Florida, to Sioux City, Iowa, the story is the same. Skyrocketing housing prices are a boon for some and a disaster for others. 

Spokane-based SRM Development has launched a new affordable housing division to take advantage of the situation. In New York, there are lotteries for housing with monthly figures starting at $1,200 a month for a cracker box. And Amazon’s Housing Equity Fund has already committed over $285 million to accelerate creating an estimated 2,000 affordable homes for the Puget Sound region. Of significant concern is the divisions this real estate balloon is making. What does all this mean for the broader socio-economic picture?

At the other end of the boom spectrum, we find this Time Magazine report recently tells of 80% of large metropolitan areas in the United States being more segregated in 2019 than they were in 1990. This story relates primarily to racial segregation rather than economic segregation. For me, the question arises, “Is America becoming Japan?” I wonder how many people out there foresee the American Dream as a high-rise cubicle out of the cult classic Blade Runner?

Finally, without taking on a social activist role here, it’s clear the real estate boom has hurt more people than it has helped. The Blackstone deal, I am amazed to say, is one of the best moves to mitigate the situation for some. What Home Partners of America does is something that used to be reasonably expected. People enter into a lease/option agreement with all the associated positives that go along. This kind of redux of homeownership financing ingenuity will help many people in the middle of the socioeconomic spectrum, for sure. If America is to avoid looking like a dark Sci-Fi Hollywood flick someday, the dream of owning a single-family home needs to be attainable. I think governments should support this kind of affordability initiative, at least as often as they do gigantic real estate developers. 

To be continued…. 

Image credit: Dystopian high-rises by TORLEY

Phil Butler

Phil Butler is a former engineer, contractor, and telecommunications professional who is editor of several influential online media outlets. Phil began his digital ramblings via several of the world’s most noted tech blogs, at the advent of blogging as a form of journalistic license. A graduate of The College of Charleston, Phil also served in the United States Navy, and has worked for any number of Fortune 500 companies. Together with his wife and partner Mihaela Lica Butler, Phil also helped forge Pamil Visions PR into one of the most successful online PR companies in the world. His greatest accomplishments however involves being the best husband, father, and friend he can be.

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