Abbott Eyes Wall Street’s Homebuying Activity

Gov. Greg Abbott | Photo by Peter Nicholls/Getty Images

Gov. Greg Abbott called on state lawmakers last week to limit Wall Street’s ability to make large-scale home purchases in Texas.

“I strongly support free markets,” Abbott said in a post on 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.”

Abbott’s call to action came in response to a viral social media post claiming that private equity firms purchased nearly half of all U.S. single-family homes in 2023 and were on track to match that figure again in 2024.

The claim comes from a study published by Business Insider that found that investors accounted for 44% of all single-family home purchases or flips during the third quarter of 2023 when combining the number of closings for larger private equity firms and smaller independent operations.

“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,” reads a social media post by the account Wall Street Apes.

As Wall Street firms and other big-money investors stake their claim in the single-family home market, younger generations of Americans are reportedly increasingly watching their dream of homeownership slip further and further out of reach.

Some feel that Wall Street’s role in the housing market is particularly concerning, given the massive population boom in Texas. Not only are homebuyers facing increased competition from people relocating to the state, but they are also up against institutional investors who face little competition in a bidding war.

Besides institutional activity leading to fewer housing options, skyrocketing home prices and climbing mortgage rates in the United States have left many would-be buyers disenchanted with the process.

According to Alex Thomas, a senior research analyst with John Burns Real Estate Consulting, the problem is only expected to worsen as prices for first-time buyers increase.

“Institutional investors have grown as a share of fix-and-flip buyers, but this is at least partly the result of more rate-sensitive buyer types, particularly first-time buyers, being priced out of the market due to high rates,” Thomas told Business Insider.

Texas’ median home price rose to $332,100 in January 2024, a 23% increase from $269,400 a year earlier, according to data from Redfin.

Mortgage rates have also become a significant obstacle for today’s homebuyers. In January 2021, the average 30-year fixed mortgage was around 2.7%, according to Mortgage News Daily. Today, the average mortgage rate is hovering around 7%, an almost 160% increase.

Two bills were introduced during Texas’ 88th legislative session to restrict investment firms’ purchase of single-family homes, but state legislators failed to enact them into law.

HB 1056 would have required financial institutions to register their information and number of investment properties with the state comptroller, while HB 1057 would have restricted investment firms’ ability to purchase residential properties listed for sale before the 30th day after the date the home is initially listed.

Relatedly, since President Joe Biden took office, the U.S. dollar has lost a substantial amount of its purchasing power. According to the Labor Department’s inflation calculator, $100 in 2024 has about the same purchasing power as $86 in 2021, marking an average inflation rate of 5.03% and cumulative inflation of 13.62% over the last four years.

The United States also faces a looming debt crisis thanks to decades of government spending and the Federal Reserve’s decision to print trillions during the COVID-19 lockdowns.

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