Gov. Greg Abbott has come out in support of legislation that would prevent hedge funds from buying single-family homes in a rare siding with Democrats.
Concerns about hedge funds buying homes center on the fact that such organizations have the financial backing to purchase numerous homes and entire neighborhoods, often turning them into rental properties, which has purportedly been exacerbating rising home prices as supply dwindles.
Senate and House Democrats in the state legislature have introduced a bill to bar Wall Street from these purchases. Some Republicans have also shown support, though most believe the government should take a hands-off approach to manipulating the market.
“I strongly support free markets,” 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,” Abbott wrote on X in March.
“This must be added to the legislative agenda to protect Texas families,” he added.
Similar legislation has been introduced in Nebraska, California, New York, Minnesota, and North Carolina to address the issue. Claims made by @WallStreetApes on X indicate that private equity firms were responsible for purchasing 44% of all single-family homes sold in 2023. The same post claims that 2024 will yield a similar purchase rate.
“Now America has a lot of problems, but this should be a unifying problem that every single person who is not part of one of those private equity firms cares about, including current homeowners,” the account posted. “Our generation will not be homeowners. They will have us permanently renting from, like, 2 or 3 companies. Now America has a lot of problems, but this should be a unifying problem that every single person who is not part of one of those private equity firms cares about, including current homeowners.”
The post did not provide any source data, but the claim appears to have originated from a story on Medium.com based on a study by Business Insider. That report claims that equity firms sold 44% of flipped homes to other investment groups, not a total of all home sales.
Housingwire reported that the 44% figure was “laughable,” providing data from several sources that paint a more clear picture of the reality of large firms buying up housing.
The data shows that about 26% of single-family home sales in 2023 were credited to equity firms, with nearly 40% coming from new home construction.
Business Insider pointed out that soaring mortgage rates have led to a tightening of private buyers who require a mortgage to purchase a home. Investment firms can offload properties to other investors to recoup costs and advance other projects.