Texas Home Buyers: Meet Your Other Competition
From Texas Standard:
Having trouble buying a home in Texas right now? The flurry of business relocations to the state are not the only reasons the real estate market is tighter.
Some of the blame for this hot market can be traced to investment groups, according to Ryan Dezember, who wrote about this latest trend in the Wall Street Journal. The pandemic has lured more firms away from commercial real estate to residential. With so many office towers sitting empty right now as more people work from home, investment groups are swooping down and scooping up entire subdivisions to turn into rental properties.
Dezember pointed to a bidding war that broke out last December in Conroe, 40 miles north of Houston. The competition wasn’t over one house but an entire subdivision. Home builder D.R. Horton had built a group of 124 houses and instead of selling them one at a time, they put it all up for bid.
“They thought, you know, investors are dying for rental houses,” Dezember explained. The winning bid? $32 million from the online property-investing platform, Fundrise LLC, which manages more than $1 billion on behalf of about 150,000 individuals. Horton made far more than if they had sold the homes one at a time.
Texas is a particularly hot market for these kind of large purchases, Dezember said.
“The Texas markets are booming and investors love them,” he said. “You have a lot of people moving to Texas for economic reasons, for weather reasons, and investors are getting ahead of that and buying houses that they want to turn around and rent out.”
Dezember said he sees this trend continuing for now.
“A lot of the other options are really dicey right now in property. You know, do you want to invest in an office tower or a shopping mall now, or do you think the safer bet is to own, you know, 10,000 single family homes with families paying rent every month? And increasingly, investors are choosing the single family homes.”