Lake Houston - Humble - Kingwood Edition | July 2022

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NEW NEIGHBORS

HOMES PURCHASED BY TOP INVESTMENT FIRMS 77345 77346 77365 77339 77338 77044 77396 Total

Property data from the Harris County and Montgomery County appraisal districts showed institutional investors have made signicant purchases in the Lake Houston area. Investor names were sourced from the Kinder Institute for Urban Research at Rice University. LAKE HOUSTONHUMBLEKINGWOOD AREA ZIP CODES

Invitation homes Tricon Residential FirstKey Homes Progress Residential American Homes 4 Rent

346 333 205 282

73 38 43 26

107

12 24 10 21

42 71 31 37

129 4

58 58

45 95

16 30

99 TOLL

198

Total

212

327

421

219 1,364

77365

SOURCES: HARRIS COUNTY APPRAISAL DISTRICT, MONTGOMERY COUNTY APPRAISAL DISTRICTCOMMUNITY IMPACT NEWSPAPER

1314

66 HOMES

district data shows. According to a 2022 study con- ducted by researchers at the Uni- versity of California at Berkeley, American Homes 4 Rent and Tricon Residential had invested millions of dollars in developing homes for rent as of the fourth quarter of 2021. Charlie Kriegel—a real estate bro- ker for Houston-based rm Winhill Advisors-Kirby, whose clients include Tricon—said these developments prioritize areas with favorable tax rates, relaxed homeowner association requirements and good school dis- tricts when targeting areas to develop.

According to HCAD data, the average home value for the 327 investor- owned homes in the 77338 ZIP code was roughly $206,800. Market data aggregator realtor.com shows the same ZIP code had an average home price listing of $249,000 as of May. Further, Evangelou said investment rms often have more leverage in the market because they can purchase properties using cash and oer ser- vices the average homebuyer cannot. In the last year, Lake Houston-area property values have increased, which Rose Miller said is due, in part, to the declining supply of homes. According to realtor.com, the median listing home price in Hum- ble rose from $275,000 in May 2021 to nearly $320,000 in May 2022. In King- wood, the median listing home price jumped from $300,000 to $360,000 over the same time period. Jennifer Wauhob, chair of HAR’s board of directors, said in a June 15 news release that recent market activ- ity suggests conditions are calming. “New listings increased by 9% in May, helping boost inventory to its highest level of the year, so hopefully we can begin to see signs of normalcy in terms of supply, demand and pric- ing,” Wauhob said in a statement. Transition to rental properties HAR data showed new single-family rental listings increased 28.6% from May 2021 to May 2022. Evangelou said institutional buyers converting the homes they purchase into rental prop- erties is contributing to surging rentals. “They create more rental housing, so even if rents rise, there is more supply,” Evangelou said. “With rising mortgage rates, it gives more options for people.” Two such rms that have invested in this practice include American Homes 4 Rent, which owns 330 homes in the Lake Houston area, and Tricon Residential, which owns 189 homes in the Lake Houston area, appraisal

77339

77345

38 HOMES

81 HOMES

327 HOMES

77338

77346

1960

421 HOMES

LAKE HOUSTON

77396

219 HOMES

77044

“You see signs all over town [saying] ‘We’ll buy your prop- erty for cash.’” While the Lake Hous- ton area has also seen a rise

212 HOMES

“THERE’S NO NEGOTIATING WITH AN INSTITUTIONAL BUYER. ANYONE WHO’S BUYING FOR UNDER $400,000 WILL NEED TO UNDERSTAND THAT.” CHARLIE KRIEGEL, WINHILL ADVISORSKIRBY REAL ESTATE BROKER

the national average of 13%. The state also saw the

in build-to-rent communities, Rose Miller said institutional buying has had a broader eect on the local hous- ing market. Low supply, high prices Institutional buying trends have emerged as the housing industry is facing record lows in inventory. In May, HAR reported the Greater Houston area had 1.6 months of supply—its highest supply since October 2021. However, the market is still well below the six-month supply NAR considers to be a balanced market. According to Rose Miller, invest- ment rms often buy cheaper homes that would otherwise be targeted by rst-time homebuyers, leaving those individuals with an even smaller sup- ply of aordable homes. “It’s impacting those rst-time homebuyers that would probably be looking at around a $225,000-or-below home, [because] they now don’t have as much inventory or choice,” Rose Miller said. “Then, prices have gone up, so now they have to buy more than they want to spend and not get as much house for the money.”

second-largest percentage increase in properties bought by institutional buyers from 2020-21, climbing 4.6%. Locally, NAR data showed institu- tional buyers accounted for 38% and 29% of all single-family properties purchased in Harris and Montgomery counties, respectively, in 2021. Data from the Harris and Montgom- ery county appraisal districts shows nearly 1,370 homes in the Lake Hous- ton area are owned by ve institu- tional buyers and their subsidiaries: American Homes 4 Rent, Progress Residential, FirstKey Homes, Invita- tion Homes and Tricon Residential. Five ZIP codes in the Greater Hous- ton area housed between 5%-10% of the investor purchases, two of which are in the Lake Houston area. ZIP code 77346 includes 421 investment rm- owned homes, while 77338 has 327 investor-owned homes. Deborah Rose Miller, a Realtor with Rose Realty, said the trend of invest- ment rms turning homes into rental properties is not new. “It’s not recent, but it has accelerated as of late,” she said.

Additionally, Evangelou said fast- growing formations of households— which entails a group of people living together—large millennial and minority renter populations, and still-aordable housing have contributed to the area’s status as a target for investors. In the two Lake Houston-area ZIP codes with the highest numbers of investor-owned homes—77346 and 77338—the combined percent- ages of Black and Hispanic residents were 41.4% and 76.8%, respectively, according to U.S. Census Bureau data. In the ZIP code with the lowest num- ber of investor-owned homes—77345— the percentage of Black and Hispanic residents was 15.5%, per census data.

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