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Investment Firms and SFR’s in Texas

The National Association of Realtors published a Research Group study in May 2022 entitled The Impact of Institutional Buyers on Home Sales and Single-Family Rentals. This study produced three key findings. First, institutional buyers made up 13% of the residential sales market in 2021. Second, institutional buyers tend to purchase in markets with rising household formation, strong housing and rental markets, high income markets, but also with a high density of minority groups. Third, institutional investors have a larger market presence, and offer cash and services that home sellers prefer.  

According to NAR, in 2021 Texas had the highest percentage of buyers who were institutional investors at 28%. Georgia was second at 19%, for comparison. The national average for institutional buyer market share in 2021 was 13.2%. The numbers are even more glaring when you take a look at the DFW metroplex. All four counties that make up the DFW Metroplex (Collin, Dallas, Denton, Tarrant) were found to have a much higher institutional buyer share in 2021 than the national average of 13.2%. Collin County was 34%, Dallas County was 43%, Denton County was 39%, and Tarrant County was the third highest county in America at 52%.

On December 20, 2022 Representative Gina Hinojosa filed HB1056 and HB1057 in the Texas State Legislature with the goal of combating this increase in institutional investors. HB1056 requires financial institutions and investment firms that lease residential property to register their ownership information with the state comptroller in every county they own property. HB1057, the more notable of the two bills, prevents an investment firm from entering into an executory contract to purchase a single-family home that is listed for sale before the 30th day after the home is listed. Hinojosa, speaking to Texas Monthly, noted: “Homeownership is one of the fastest ways to create personal wealth, and investors are fundamentally changing the landscape of single-family real estate throughout Texas.”

On March 2. 2023, both HB1056 & HB1057 were referred to the Business & Industry Committee. They did not receive a formal hearing in the 2023 Texas Legislative Session. Again, Representative Hinojosa, speaking to Texas Monthly, “We have shined a light on the problem, and that’s a necessary step towards solution.


 

               

 

 


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