Institutional Investors and Housing Affordability in Texas
What Impact Do Institutional Investors Have on the Texas Housing Market?
Texas has long experienced unprecedented population growth, benefitting both from those migrating to the United States and Americans fleeing other high-cost states for the opportunities and, historically, lower cost of living Texas provides. According to the Office of Texas Comptroller, approximately 225,000 people moved to Texas between 2021 and 2022; however, homebuilding has not kept pace with the influx of new residents. The increased demand and factors such as high interest rates, property taxes; inflation; and rising insurance rates have left Texas with a housing deficit of 306,000 units – second only to California.
As housing affordability in Texas has slowly eroded in recent years, new efforts are emerging to address affordability and preserve what has made Texas the economic juggernaut it has become.
Institutional buyers or investors have emerged, for some, as a culprit of the housing affordability crisis. Driven mainly by a now-debunked report citing an abnormally high percentage of homes sold in Texas were purchased by institutional investors, which, according to them, would be double the national average and higher than any state. The true story is institutional buyers, loosely defined, own a small percentage of Texas’ single-family home stock, and for officials seeking to address the housing shortage head-on, they should look to onerous local government land-use regulations.
