How Wall Street Companies are Behind the Fake 'Housing Recovery'
In the state of Georgia, home prices went up 5 percent in 2012 , even though last year the state had one of the highest foreclosure rates in the country.
Foreclosures should drive down the housing market. So this apparent upswing prompted the mainstream media to crow about the amazing "housing recovery," except there's one small detail they didn't report.
According to Alternet.org, the housing recovery is fueled almost entirely by Wall Street private equity firms, hedge funds and the other companies who are turning foreclosed homes into rentals and securitizing the rental income.
The Blackstone group spent $2.5 billion in the last year purchasing 16,000 homes, which is over $100 million per week. Property records show that Blackstone, operating under its subsidiary THR Georgia, buys the homes usually at deep discounts from the principle balance owed on the mortgage.
For example, THR Georgia purchased one Atlanta home at an auction for $90,000. The principle due on the mortgage that was foreclosed upon was $219,300.
Of course, homeowners are never offered such a sweet deal by the banks. Instead, homeowners get a flier posted on their door the day after Blackstone purchases the home, offering them the opportunity to rent the home they once owned.
The deep pockets of firms like Blackstone allows them to outbid virtually everyone else in the market so the owner occupants are iced out.