Wall Street Scooped Up A Third of Texas Single Family Homes Sold Last Year

Deep-pocketed investors flocked to Texas’ residential real estate market in 2021.

Almost a third of all homes sold in Texas last year were picked up by institutional investors that paid cash, according to a report from the National Association of Realtors.

In 2021, the Lone Star State had the highest rate – 28 percent– of homes sold in the U.S. go to big investors, more than double the national average of 13 percent.

These investors focused their purchases on Tarrant and Rockwall Counties in the Dallas-Fort Worth Metroplex and Midland County in Texas’ oil patch.

Investors are attracted to Texas’ growing population and other favorable demographic trends, though their purchases, backed by cash, have drawn criticism that they are contributing to rising prices and shutting out first-time home buyers who can’t compete, said Nadia Evangelou, a senior economist and director of forecasting for the National Association of Realtors in an interview with the Texas Standard.

“Our study shows that institutional buyers tend to purchase homes in areas that have fast-growing household formation with larger millennial renter and minority populations,” Evangelou said. “But then we also see that although both rents and prices for homes for sale are rising quickly, housing is still affordable in the areas where institutional buyers purchase homes. Texas offers all these to investors.”
With inflation surging to 8.6 percent in May, these investors also are looking for assets that offer a hedge against inflation and are turning these single-family homes into rental properties where they can easily adjust rents annually, according to the NAR report.

Texas markets led with the number one factor investors look for in a market: fast household formation.

In parts of the country where investors own more than 30 percent of single family homes, the number of households grew 11 percent on average the past decade.

Texas counties have blown past that average growth rate of household formation.

Williamson County, near Austin, with 37 percent of single family homes owned by investors had a household growth rate of 48 percent during that period.

Two Dallas-Ft. Worth markets, Denton County where investors hold 39 percent of homes had a household growth of 38 percent and in nearby Collin County where investors own 34 percent of homes, household growth came in at 39 percent.

Texas markets also held the top three spots for education and income.

In early 2022, semiconductor manufacturer Micron Technology said it was considering Williamson County for the site of a multibillion dollar chip-making facility because of the area’s access to a “deep talent pool, reliable and competitively priced utilities, sustainability and regulatory friendliness.”

Communities in Central Texas are touting the project’s potential to bring additional residential and commercial development to the region and would certainly add to the attractiveness of the area to single-family home investors.

Travis County where Austin is located topped the list. The market has 41 percent of single family homes owned by investors, a median income of $82,000 and 64 percent of households with at least a bachelor’s degree.

Denton County has a median income of $89,000 and 53 percent of households with a bachelor’s degree, while residents in Williamson County have a median income: $88,500 and 50 percent of households with at least bachelor’s degree.

By: Karn Dhingra I The Real Deal I June 14, 2022