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Report: Texas leads the nation with nearly a third of homes sold to investors

The National Association of Realtors found institutional investors bought 52% of homes in Tarrant County and 43% of homes in Dallas County in 2021

DALLAS — A new report shows Texas is by far the top location for institutional investors buying homes, including roughly half of homes sold in Tarrant and Dallas counties.

The report from the National Association of Realtors looked at deeds and found corporations, companies or limited liability companies (LLC) and found 28% of homes sold in Texas in 2021, far above the national average of 13%.

“The very things that make Texas very attractive to people moving here and wanting to be homeowners themselves are the exact same factors that make it attractive as an institutional investor,” Chris Kelly, the president and CEO of realtor company Ebby Halliday, said. “You are one of many, probably, who are going to be competing for that same property.”

The NAR report found North Texas was a focus for investors. 52% of homes bought in Tarrant County and 43% of homes in Dallas County went to institutional investors. The other targeted counties were Johnson County (48%), Rockwall County (45%), Denton County (39%) and Kaufman County (38%).

The homes aren’t always being flipped and sold again. Often, they’re being rented out instead.

Investors are targeting areas with high growth in the number of households, a high share of Black households, high-rental areas, areas with a large concentration of millennials and where housing prices have risen the most, according to the NAR report.

Kelly says while the typical first-time home buyer may pay far above asking price for a ‘dream home’, investors are disciplined, sticking to a clear price range but paying all in cash, closing quickly and usually not bothering to look at or even inspect the homes they buy.

“It’s the speed at which it can be done, and, ‘oh, I don’t have to worry about all these other hassles’,” Kelly said.

While they’re not bidding higher prices, investors can still push up home values by reducing the supply of homes and keeping a steady demand. Kelly thinks the true number of investor purchases in DFW is closer to 25%, but much higher around the median home price or below, so the homes can be rented out easier.

“They are very focused on a very specific price point,” he said. “That’s why it’s having a more dramatic effect on first-time home buyers.”

Home inventory is already about half of what it was pre-pandemic, according to Kelly, and the percentage of sales going to investors has roughly doubled. He’s noticed that investor buys have cooled off somewhat from 2021 but remain a significant factor, especially for first-time buyers.

His advice to making the homebuying journey less stressful is simply having patience.

“Be ready to act quickly. Have your pre-qualifications, your loan approvals already ready to go so that when you that when you do come to the seller, you look like a very confident and secure buyer,” he said. “There is still plenty of opportunity, especially in our marketplace.”

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