Texas Governor Greg Abbott is putting the squeeze on Wall Street bigwigs, calling for legislative action to curtail their buying spree in the Texas residential housing sector. With an eye on the ongoing national crisis over housing affordability, Abbott took to social media to push for change. "I strongly support free markets," Abbott posted on site X, "But this corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home. This must be added to the legislative agenda to protect Texas families."
Lawmakers have aimed to alpha out these investors, arguing they're edging out first-time homebuyers determined to plant their roots. According to the KXAN, investment firms and corporations have scooped up significant portions of the housing market, with some areas like Tarrant County seeing more than half of home sales going to institutional investors at one point. The National Association of Realtors highlighted that investors were behind 28% of Texas' home purchases in 2021.
Last year's legislative attempts to reel in this activity proved fruitless. Measures included a proposed bill for a detailed annual report on institutional buyers by the Texas Real Estate Research Center at Texas A&M University. However, Abbott vetoed the bill amid a tug-of-war with state legislators over a property tax cut package, as stated by the Texas Tribune.
Yet, some experts argue that keeping investors at bay could inadvertently freeze out potential renters from desirable neighborhoods. "If you say none of these single-family homes can be rented out, or you make it too harder for them to be rented out, you make it harder for families to live in the neighborhoods that have the best schools or have the best parks, amenities, transit, whatever it is that single-family neighborhood has going for it," Redfin chief economist Daryl Fairweather told the Texas Tribune. Furthermore, the share of large-investor home purchases has declined since the pandemic's peak interest rates, potentially reducing the urgency of such legislative measures.
Despite the present cooling of investor interest, challenges persist. Texas continues to grapple with housing availability, keeping the debate over investor impact ignited. On the alternative end, some argue that the higher interest rates, which have brought more homes to the market, may have already begun naturally to address the inventory crunch without legislated intervention. David Jarvis, principal at John Burns was quoted saying, "Investors have not sucked all of the inventory out of the market." However, with the legislative gears now in motion, only time will tell how Texas will balance property investment and availability for its everyday would-be homeowners.
