In This Issue
Vol. 27 Issue 13
BLACKSTONE, ELON MUSK & ALL-CASH OFFERS
- THE REAL ORIGINS OF THE BOOM
- THE FUTURE OF US REAL ESTATE
Last week, SNS member and seven-time FiRe attendee Elon Musk did something that, given his billionaire status, could’ve been considered almost yawn-worthy. He made an all-cash offer on a property.
According to Redfin, nearly one-third (30%) of US home purchases this year were paid for with cash.
The only difference in Elon’s case is that the property he had his eye on was virtual: Twitter. After reportedly divesting from his entire real estate portfolio in 2021, he was living in a rented tiny home at SpaceX’s Texas HQ worth just $50k when he made the $43 billion bid on what he hoped would be his next virtual property.
But while Elon’s offer may have been rebuffed (for now), another significant all-cash offer, just a few cities away, was not.
On Tuesday, investment firm Blackstone announced that it’s acquiring student housing company American Campus Communities in a $12.8B all-cash deal. The move will make Blackstone the largest publicly traded owner of campus housing in the US, with 166 buildings in cities and college towns across the country.
Unlike Elon’s personal real estate approach, Blackstone has been buying up US residential real estate left and right – with a special focus on affordable rentals.
It’s a strategy that’s paid off for them: “home values grew 19.6% last year, an all-time high in Zillow’s data, which dates back more than 20 years. ”
This proliferation of all-cash offers, combined with a record-breaking bump in real estate prices, has created a market in which it is nearly impossible for first-time lower- and middle-income homebuyers to compete.