It doesn't make sense because the headline and linked tweets misrepresented the facts of the WSJ article it sourced its info from. I quote "Blackrock is buying

It doesn't make sense because the headline and linked tweets misrepresented the facts of the WSJ article it sourced its info from. I quote "Blackrock is buying every single family house they can find, paying 20-50% above asking price and outbidding normal home buyer..." and then he links to https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801 https://www.wsj.com/articles/if-you-sell-a-house-these-days-... 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 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.