June 6th, 2014 10:14 AM by Nick Rapplean
Jonathan Gray is the head of global real estate for Blackstone, the giant alternative investment company which, as you may recall, has built up a huge portfolio of single family homes which it is methodically fixing up and renting out. Invitation Homes is the name of the Blackstone division that he heads and he is indeed in charge of global real estate, from the Middle East to Europe to the U.S.
Mr. Gray recently announced that shares of Invitation Homes will be sold in an initial public offering that will take place in roughly a year. First, he says, his firm needs to concentrate on "getting the business to a place where it's ready, where it's mature enough, where it's stabilized enough, where investors can look at it and say, 'This is a really simple, straightforward business."
At its height last year, Mr. Gray's firm was buying $150M homes a week, but the amount has slowed in recent months, hitting just $25M in the most recent period. "We've done a lot of the heavy lifting in terms of renovating the homes and stabilizing the business."
Still, $25 million is $25 million. Blackstone is definitely still in the business of building its holdings, but it's working hard now on creating a company that can run smoothly and last. It is a fascinating task. Sadly, the task isn't being accompanied by a vigorous discussion in America of how we want our housing policy to work and to look. What do we want to achieve through housing and how do we want to achieve it?
Over the past few decades, we have wanted to build a better, more equitable society with our housing policy. When President George W Bush stepped into office, he was handed various studies that demonstrate rarely-considered benefits from making houses affordable to as many Americans as possible. The studies asserted that neighborhoods in which a majority of the homes were owned tended to spawn children who did better in school, safer neighborhood streets, better-maintained houses, and a broader, more general sense of ownership of lives, not just houses, among the homeowners. Further, those who owned their homes had a far greater chance of ascending the socio-economic ladder than did their renting counterparts.
These theories, though doubtlessly meaningful, in turn helped to produce the years of easy lending, subprime mortgages, for example, as lenders sought to respond to the federal government's call for a higher and higher property ownership rate.
The discussion, though, should still be very much alive. I realized this when a very good friend said, a couple of days ago, "Oh, I don't want the troubles that come along with home ownership." Blackstone and other growing companies are selling new systems for residential rentals. They would make renters of a much larger number of us and, though their ideas are doubtless good in the main, we seem to be abandoning what we learned years ago about home ownership and the quality of our lifestyles and living arrangements.
It's a discussion we need to have. And very soon.