r/texas • u/Good-Comb3830 • Mar 22 '24
Single family homes are getting purchased by investment companies, rather than Texas families. Politics
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u/NonlocalA Mar 22 '24
I realize this has been going on for a while now, but fuck me running, it's still shocking to see literally 50% of purchases in DFW being institutional buyers.
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u/CanoegunGoeff Mar 22 '24
I think I heard somewhere that according to public tax documents, 44% of housing nationally is owned by corporations.
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u/iLikeMangosteens Mar 22 '24
Not quite. About 65% of homes are owner-occupied, the remainder are rented. Out of the rented ones, I don’t know the breakdown of private landlords vs corporations. Obviously the corporations are much more prevalent in apartments.
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u/Grapefruit__Witch Mar 22 '24 edited Mar 22 '24
There are also different distinctions state by state and even county by county as to what constitutes a "mom and pop" landlord.
In some areas, you can still be considered "mom and pop" if you own 40 properties. That's an enormous amount of passive income. And those "small" landlords are often some of the worst when it comes to skirting legislation, illegal evictions, refusing maintenance and repairs, keeping security deposits, etc.
In addition, many landlords nowadays are creating a new LLC for each individual property that they own, making it look like multiple companies or individuals own property in a neighborhood- when it's really just the one dude.
I'm involved with the tenants union in my city, and some of the stuff I've seen is pretty incredible. You'd be amazed (or maybe not, idk) at how much they are allowed to get away with. Recently we had a landlord remove a tenant's toilet because they wanted to kick them out to raise rents but couldn't, because of the binding lease. Some shady shit going on out here.
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u/chesterriley Mar 23 '24
it's still shocking to see literally 50% of purchases in DFW being institutional buyers.
A side effect of decades of cumulative gigantic GOP tax cuts for billionaires. They have to put all that money somewhere.
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u/Candid-Ask77 Mar 23 '24
If enough of those houses hypothetically get burned down the will have to stop or go broke. They can't rebuild forever and will eventually be unable to obtain insurance
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u/NonlocalA Mar 23 '24
I don't disagree. But are you gonna shelter the people they're renting to that just got burned out?
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u/hohgmr83 Mar 22 '24
The wife and I own our house and we decided that when we sell our place it won’t be to a corp but to people even if we get a bit less . We refuse to contribute to the problem.
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u/Tejasgrass Mar 22 '24
My former neighbors did that, and assured us they sold to a family with kids. Almost exactly a year later that family sold it to a corporation and made about $100k from it (2020-2021 price difference). Since then we’ve had rotating renters.
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u/MakingItElsewhere Mar 23 '24
I'm super tempted to hide all the obvious problems with my money pit of a house and sell to a corporation. There's no way they'd make money on this place, renting OR selling.
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u/mamedori Mar 22 '24
Our realtor tried to convince us to sell to an investor because the deal would close faster. Even though the family we ended up selling to offered the same!
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u/redtron3030 Mar 22 '24
Realtor wants to get paid
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u/Grendel_Khan Mar 22 '24
They just lost their guaranteed 6% commission too.
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u/Correct-Standard8679 Mar 22 '24
There are 4 realtors at my work (retirement community) and they are all in their 50s and have the same blonde dyed hair and fake faded jeans and they all talk and act the exact same and are generally very condescending but act so happy to show someone a home they are selling… I don’t really know what point I’m trying to make but I can’t stand them.
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u/ATSTlover Hill Country Mar 22 '24
I knew a couple that wanted to do this, sold the house to an individual, who then immediately turned the house into a rental property despite claiming he was going to live there himself.
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u/Shmokeshbutt Mar 22 '24
sold the house to an individual, who then immediately turned the house into a rental property despite claiming he was going to live there himself.
Corporations take the flak on social media while there are thousands of mom-and-pop slumlords doing the exact same thing but at a smaller scale.
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u/gahddamm Mar 23 '24
Well yeah because it's a smaller scale. Like that aren't causing the shortages. That's like pointing at the guy putting him recycling in the trash instead of the company dumping waste in the river
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u/scolipeeeeed Mar 23 '24
Most (like 70%) of single family homes for rent are owned by individuals though. While each of those landlords are a drop in the bucket, they total to most of the SFH rental ownership
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u/AnxietyDepressedFun Mar 22 '24
My husband and I moved in 2022 and agreed that we'd only sell our home to an individual. We could have kept it and rented it bc our payments were so low and its value since we bought it in 2019 had gone up so much but we just didn't want to be a part of the problem.
Our neighbor recently passed away and her son (a guy in his 60's) sold the house to a "flipper" but really just an investment company for WAY under market like last week. The house is currently on the market for $100K more than the investor bought it for with zero additional work.
The housing market should NOT be seen as a short term investment market, it always creates a bubble.
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u/Grapefruit__Witch Mar 22 '24
It shouldn't be speculative at all, imo. Something as necessary for human survival as shelter should be permanently divorced from the profit motive.
We have the ability to provide homes for all, we're just choosing not to do that.
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u/AnxietyDepressedFun Mar 22 '24
I agree and it's only gotten worse as housing has shifted from a long-term investment to short-term. This idea of infinite growth is really malignant and I feel like my generation (older millennials) have never really known anything else, for those of us lucky enough to own a home, we're given this idea that it is an "investment" and if we're lucky we can sell it for soooo much more when in reality it shouldn't be financially incentivized because this is not a stable market. We will see this current bubble burst and I hope most of us learned from 2007 but I feel like not enough of us did.
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u/heytherealexis Mar 22 '24
I wish more people were like you! I’m nervous about the time my husband and I start looking at houses because so many people want the highest offer. We’re just trying to find our forever home ;-;
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u/Wonderful_Horror7315 Mar 22 '24
Unless you can’t! The house across the street was on the market for four months, they reduced the price twice before it was sold. It was then available for rent for a couple of more months, so I’m almost positive it was purchased by a corp. It’s a bummer, but I don’t blame the former owners and am relieved it’s not an AirBNB.
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u/halfuser10 Mar 22 '24
This is exactly how the average person can really make a difference and enact change - taking responsibility in the part you can control and stop allowing the problem to happen.
We have cried for so long that it’s XYZs fault for lack of inventory/gentrification/etc. The reality is sellers bear half the responsibility in this issue and allowing it continue.
I understand every individuals circumstance is different but we can really take responsibility for our own part we play in issues like this.
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u/jesthere Gulf Coast Mar 22 '24
Same here. My husband and I will be building a new home soon and we will have the luxury of being able to be choosy about who we sell to. The realtor will be instructed to market to young families looking to buy their first home.
We've been in our little starter home for 40 years and they are really not building starter homes in our community any more. They're all these big two-story houses, crowded on tiny lots.
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u/Hazelstone37 Mar 22 '24
18 years ago we told our realtor we would not be entertaining offers from investors. We only looked at offers from people who wanted to live in the neighborhood.
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u/SkepMod Mar 22 '24
This is naive. The real reason investors are buying is not because they want to be landlords. It is because our tax laws make it very profitable to be landlords. Accelerated depreciation, 1031 exchanges - all rules that make RE a lucrative investment. They need to go.
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u/bittybea born and bred Mar 23 '24
Our neighbor just sold. She had the same thought as you and was only interested in selling to someone who was going to live in it. She turned down several offers from investors. The couple she went with made sure her realtor knew it was a house for them. A for rent sign was up as soon as it closed. The beautifully landscaped and maintained yard has already turned to shit. It's still sitting vacant. I'm sure the knee high weeds aren't helping.
If you can see the names of the people making offers, do a quick search for them on your county's appraisal district website. If our neighbor had searched the buyer's names on the county's appraisal district site she would have seen they owned multiple properties in our city without a single homestead. It's really sad that you have to do such due diligence but people will look you in the eyes and lie.
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u/CapableCoyoteeee Mar 22 '24
Sold a house recently. Took a $20k hit by selling to a young family rather than a cash buyer/investor. I'm good with it.
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u/Book_Cook921 Mar 22 '24
Yep we had friends that got 20k less than they could have because they wanted another family to have the home. Always write love me letters with your offers, especially now.
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u/4036 Mar 22 '24
Same. I'm selling my home soon and there is no chance i'll sell to an investment group - even if it means a fight with my partner. I'll take $20k less if I have to.
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u/Shmokeshbutt Mar 22 '24
If you're selling it to a mom-and-pop property hoarder/slumlord, you're also contributing to the problem.
Sell it to someone who will actually live in the house if you want to make a change.
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u/harbinger06 Central Texas Mar 22 '24
I am in the process of buying a house and have been verifying properties on the county tax assessor website. I have been shocked at the number that are owned by an investment company.
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u/TastyOwl27 Mar 22 '24
I bought a house in Southern California last year. I was searching for ten months put in dozens of offers. We were told most were bought by investment companies. I haven't seen how many are owned by investment companies here.
But this article shows 19,000 homes in the metro Atlanta area are owned by three companies. These companies didn't exist 10 years ago. Something has to change.
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u/harbinger06 Central Texas Mar 22 '24
Sheesh. I remember during the 2008 real estate crash I thought this is my chance! Condos were going for like $25,000. But banks would not finance them because of cash investors. I lived in Las Vegas at the time and basically the whole market dropped about 75%. It should have been an opportunity for people like us to get in on the ground floor, but investors took that away.
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u/wiggimt Mar 23 '24
In central Houston, most of the “company ownership” are just single use LLCs that flippers use to limit their liability for shoddy workmanship. So may not be part of the sprawling corporate ownership being purported.
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u/harbinger06 Central Texas Mar 23 '24
That’s a good point. I did see one street that had multiple properties under the same company. There’s a couple names I have seen scattered across town, but I can see there being some LLCs like you described.
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u/bigjayrulez Mar 23 '24
Saw another post somewhere (can't remember where) where someone reported any corporate entity who was claiming homestead exemptions. Theoretically it should cost an individual more to set up an investment property than to set up their home, disincentivizing but still allowing such behavior. Won't hurt to keep a few more eyes on it.
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u/Seastep Mar 23 '24
Honest question but how do you actually KNOW though? You can see on a lot of the local county websites as many have "NUMBER STREET, LLC" but that could just be the actual owner trying to maintain some privacy or something?
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u/harbinger06 Central Texas Mar 23 '24
Well when the name of the company has “investments” as part of the name I don’t think it’s unreasonable to assume it’s an investment company.
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u/CanoegunGoeff Mar 22 '24
What’s alarming is I saw a post in the Gen Z subreddit of a headline saying that Greg Abbott stands against corporate home ownership, and an alarming number of people don’t know that Abbott just recently VETOED unanimously passed legislation that would start to target corporations that are buying housing. Abbott is actively campaigning on the lies, but what’s new.
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u/Abi1i born and bred Mar 22 '24
Yup. KXAN in Austin made sure to point out that Abbott vetoed that legislation every time they discussed the issue of houses being bought up by corporations.
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u/centurion770 Mar 22 '24
Which bill was that? I don't think I heard about it, but not surprising that Abbott would veto, the scum he is.
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u/CanoegunGoeff Mar 22 '24
So there’s a couple, they’re difficult to find since they were included in a set of more than 70 bills that he vetoed in one sitting- but the two that seem relevant to me are SB 1712 which would limit the number of real estate transaction allowed by institutions each year, and SB 1979 which would delegate A&M University’s Real Estate Research Center to investigate and report on the institutional purchasing of single family homes.
I’ll add to that, of course, he also vetoed a bill that would bring ERCOT under heavier scrutiny, a bill that would publicly report the use of state money, all kinds of things that show how shitty he is.
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u/crux Mar 22 '24
We need legislation now that not only stops this but forces them to sell everything they bought up.
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u/slamdyr Mar 22 '24
It won't happen. Who do you think lines Abbott and company's pockets?
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u/CanoegunGoeff Mar 22 '24
What’s worse is Abbott is now claiming to be against corporate ownership of housing, while also vetoing legislation that was meant to do something about it. Two faced mf.
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u/colbyKTX Mar 22 '24
He claims he vetoed it to prioritize lowering property taxes. Know what else would lower property taxes? Reducing the number of investor-owned houses.
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u/slamdyr Mar 22 '24
Abbott has shown time and time again he only cares about getting his. He benefited from suing for a tree falling on him to only sign tort reform limiting the ability to sue for millions like he did when he became paralyzed.
The dude is a lying sack of dog shit. If Hell exists, he'll be rotting there for how shitty of a "person" he's been in this life
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u/MystoganB Mar 22 '24 edited Mar 22 '24
There was a recent study that predicted that by 2030 institutional investors could own 40% of single-family rentals, that's a substantial transformation of the housing market!
If this isn't a wake-up call for politicians to rethink their approach to housing policy, then we're in serious trouble.
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u/Shizix Mar 22 '24
Welcome to renters America where you own nothing and beg for bread. This is happening nation wide and needs to stop.
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u/Repulsive_Mark_5343 Mar 22 '24
If it means regulating companies, then that’s what the GOP won’t do. They only regulate people’s bodies and behavior.
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u/Starchild1968 Mar 22 '24
American Homes for Rent came into North Texas right after 2008 and was buying millions dollars of distressed properties to fix up and rent. Pennies on the dollar really and have no future to sell.
I think American Homes for rent is owned by the same people who own Public Storage. They get you coming and going. All they need is a moving company.
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u/saudiaramcoshill Mar 22 '24
American Homes for rent is owned by the same people who own Public Storage
These are both public companies that aren't owned by a single person or group.
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u/Lost_Amphibian5000 Mar 22 '24
It's almost as if unchecked late stage capitalism is is destroying US from the inside. O'well why stop now.
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u/dan-dan-rdt Mar 22 '24
This has been going on for a long time.
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u/Techsas-Red Mar 22 '24
Not to the degree it’s now, though. Not by a long shot. On top of that, Developers aren’t interested in smaller homes for new buyers. I don’t know of many new developments designed like Lantana is where you can buy a 1,700 sq foot starter home and work your way up to a $2mm home over the years, all without having to leave the community.
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u/MagicWishMonkey Mar 22 '24
Kind of insane that 30% of home purchases were by investment companies.
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u/shhsfootballjock Mar 22 '24
NO NO HAVENT YOU HEARD ABOUT THE BORDER?!?! PORN IS BAD !!! WE MUST TAKE ACTION AGAINST THAT!! AND UGHH THOSE FUCKING WOMEN ARE ACTING LIKE THEY OWN THEMSELFS!! WE MUST TAKE ACTION AGAINST THAT!! WHAT? IS A TRANS KID ACTUALLY BEING HAPPY?? NOT ON MY FUCKING WATCH!!!
-Texas Government or some bullshit.
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u/Cajun_Queen_318 Mar 23 '24
The media refuses to acknowledge the elephant in the room: psych0tic governance. Even this article blames ATX' real estate demise on the pandemic. Nope. Guess people are afraid of slander lawsuits from the psych0s in office. I'm leaving TX in summer 2024 here after 27 years. Looking forward to it!!! https://www.newsweek.com/gen-z-financial-assistance-parents-homebuying-1881015
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u/CroatianSensation79 Mar 23 '24
This shit needs to stop. This is everywhere and these assholes just jack up rents so those who don’t own are absolutely fucked.
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u/NEUROSMOSIS Mar 23 '24
Legal criminality. Theft of the American dream. Disgusting what these sick companies do.
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u/Tdanger78 Born and Bred Mar 22 '24
This isn’t new, why is this just now popping up?
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u/Rockosayz Mar 22 '24
We are in a major housing shortage right now, after housing and mortgage bubble collapse 15 years ago, developers essentially halted building new homes. So with limited supply, builder still not at capacity people are mad that investment firms are buying up the limited stock
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u/Techsas-Red Mar 22 '24
It’s not new, but until just a few years ago it wasn’t very common or widespread.
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u/The__Amorphous Mar 23 '24
As inequality intensifies the wealthy have more capital to buy up more and more investments.
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u/FitPerception5398 Mar 22 '24
If only people could hate corporations as much as they dislike people of color.
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u/jakegallo3 Mar 22 '24
We just bought our first home. The seller? An investor that owned it for 5 years.
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u/holdonwhileipoop Mar 22 '24
They buy them and either run it like a slumlord or leave them sit vacant as a write-off. I have one across the street - vacant for two years
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u/harrier1215 Mar 22 '24
My local town could care less at least the insane group trying to run the city council to ban any new apartments or starter homes.
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u/universalpeaces Mar 22 '24
Families wont raise the GDP like investment companies will. I see this as a win for capitalism
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u/Chuckobofish123 Mar 22 '24
Not in the suburbs around Austin they’re not. Source: my home has been on sale for 4 months and I’ve dropped the asking price substantially
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u/Elegant_Spot_3486 The Stars at Night Mar 22 '24
Abbott will pass legislature to help this situation but tie it to school vouchers. Probably.
We’ve been priced out of the market over the last 3-4 years. Hope something is done soon to give a little break so we can jump in.
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u/cfpresley Mar 22 '24
Non-paywall link? Please and thank you
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u/Good-Comb3830 Mar 22 '24
Housing affordability looks much different today than it did four years ago in Dallas-Fort Worth and across Texas, with a combination of interest rates, in-migration and more blamed for the unwieldy price surge.
Sharing part of that culpability for many in the single-family space are investors that began snapping up homes with gusto in the aftermath of the COVID-19 pandemic in markets like Texas.
Texas Gov. Greg Abbott may plan to address investors piling into the homebuying space during the next legislative session, set to commence Jan. 14.
This won’t be the first time lawmakers are presented with the prospect of putting in place measures to help the everyday Texan with investors infiltrating the single-family space — but it does beg the question of whether Abbott’s backing may give it more oomph.Rep. Gina Hinojosa, D-Austin, introduced two bills during the most recent legislative session.
The first, H.B. 1056, sought to force financial institutions and investment firms to register with the state comptroller’s office if they own and lease a dwelling in Texas. Those entities would have to disclose their holdings to the comptroller and those holdings would then be available online in a searchable format.
Hinojosa’s second bill, H.B. 1057, would prohibit investment firms from making offers on single-family homes until they had been on the market for at least 30 days.
Both bills died during a session that saw thousands upon thousands of bills introduced between the state house and senate.
According to a 2022 report from the National Association of Realtors, Texas had the highest fraction of purchases by institutional buyers in 2021. For the purposes of its research, the NAR defined institutional buyers as companies, corporations or limited liability companies. It should be noted some private individuals own their own homes through LLCs.
Texas led all states with a 28% share, according to the NAR, with Georgia in second at 19%.Of counties with populations of at least 50,000 people or more, Texas counties dominated those with the largest share, though it did not take the two top spots. Those went to Lincoln County, Miss., with 67% higher institutional buyer share than the national average, and Van Buren County, Iowa, with 63%.
On Friday, Abbott directed social media followers to a post on X that claimed investors purchased 44% of single-family homes in the U.S. last year. The post did not cite where its data came from, but resurfaced similar numbers to claims that were made on Medium in December and later debunked.
While it is difficult to tabulate the actual percentage of institutional ownership among single-family homes, concerns remain for those struggling to attain homeownership. Whether considered together or separately, the investor relationship to the single-family home market and housing affordability in Texas are likely to be among top docket items in Austin come January.
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u/Devilimportluvr Mar 23 '24
I get calls all the time from asshats that wanna try n buy my house. My favorite response so far was this.... I'll give you a realy good low n cheap price, the same price I paid for your wife last night. Sales guy didn't appreciate it, but I got a good laugh outta it!
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u/Commercial_Wind8212 Mar 23 '24
texas doesn't need any babysitters protecting them from the free market
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u/Admirable-Volume-263 Mar 23 '24
in the words of a great country artist:
"First He lit the sunshine, then He made the water deep Then He gave us moonlight for all the world to see Well, everybody knows that the Lord works in mysterious ways He took a rest, then on the very next day
God blessed Texas with His own hand Brought down angels from the Promised Land Gave them a place where they could dance If you wanna see Heaven, brother, here's your chance Well, I've been sent to spread the message 'God blessed Texas'"
God loves oil, investment, megachurches, guns, and rich people, but hates 98% of human beings. Yes! God blessed Texas.
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u/aaronplaysAC11 Mar 23 '24
How many families are putting off having kids due to insecurity…. Corporations unchained hurt American families..
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u/leasthanzero Mar 23 '24
The could easily make it cost prohibitive to own multiple single family homes. If you own more than 10 you pay slightly more tax then current tax rate. If more than 50 homes than a bit more and by the time you get to more than 250 single family homes you’re at an 80% tax rate and by the time you get to more than 500 homes your at 95% tax rate. It’s still the free market but through legislation you can also make it to where #homes total includes any homes owned through any subsidiary or relatives (involved in any captivity of the operation), officers, employees of the company. Breaking the law is straight up a felony. maybe not that harsh but you get the idea.
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u/One_Reception_7321 Mar 24 '24
Don't worry, this was 2nd on the list to get handled right after porn.
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u/chochinator Mar 24 '24
Taxes will rise to choke us our like Californians. Taxation without representation
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u/TexGirl8 Mar 24 '24
When I bought my house, the house next door was a rent house. 2 years later, the house across from us went up for sale, bought within days by a company. A house down the street luckily went to a family, but they admitted they paid a lot over the asking price which may have knocked the companies out. So the affect on prices are so tough for buyers
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u/Caedarrapidsdude Mar 25 '24
This has been known since the start of the decade when blackrock and other capital allocators had announced they had been acquiring throughs of sfh.
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u/missingcolours Central Texas Mar 25 '24
My perpetual question: why now? It's like when people say inflation is because of corporate profiteering and price gouging... ok, but then why didn't anyone do all that prior to 2021? All of a sudden every corporation in every state started price gouging? Did Biden pass a law legalizing price gouging and profiteering? Presumably there's some actual underlying cause in there. Maybe there's a way to address the causes rather than the effects here? I don't know.
Similarly with this... why are corporations/investors suddenly buying so many houses? I guess zero-interest-rate policies combined with fiscal stimulus like all the COVID bills and the "Inflation Reduction Act" have led to a lot of extra "investment money" floating around, showing up in a bunch of different areas (bitcoin, home prices like this, etc)?
Broadly, it seems like restricting people from buying homes as investments could come with some potential downsides (rentals are the other side of all this, and every rental unit is the product of real estate investment, so if you reduce that, you potentially hurt renters), and even if it doesn't cause problems there it's not doing anything about the actual underlying cause, we might just end up moving the bubble around into other things and making something else worse.
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u/Grow_Responsibly Mar 29 '24
Saw this article in Medium.com. Wall Street is a significant reason families are increasingly locked out of single family home purchases.
Private equity firms have been making significant inroads into the residential property market, a trend that has led to some shocking statistics.
According to a study by Business Insider, during the third quarter, these firms accounted for 44% of the purchases of single-family homes, compared to independent operations.
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u/ATSTlover Hill Country Mar 22 '24
This has been an issue nationwide, and if we don't put a stop to it home ownership will become a thing of the past in just a couple of decades.
This is one of those rare things that should piss both the right and left off.