Plano North | July 2022

BUYING TREND Growing number of DFW homes sold in 2021 went to institutions

2022 REAL ESTATE EDITION

TYPES OF INSTITUTIONAL BUYERS The National Association of Realtors surveyed real estate agents in residential and commercial transactions about how single-family properties purchased by institutional buyers are returned to the market. Results are based on 3,644 responses from across the country. They resell or ip. They list as a rental. They have shared ownership/shared equity. They rent to own. 3%

45%

BY SARA RODIA

market in 2021, the report stated. Among states, Texas had the high- est percentage of institutional buyers with 28%, the report stated. That is a 4.6% increase from the institutional buyer share in 2020, according to the report. The association’s report found the increase in institutional buyers reduced available housing stock, creating a more competitive real estate market for individual buyers and increasing the number of rentals. That, in turn, led to a higher turnover rate, according to the report. “The major reason homeowners sold to institutional buyers was because they oered cash, purchased the property ‘as is,’ or oered a guaranteed purchase,” according to the report. With institutional buyers, home prices are likely to increase, said Marissa Benat, president of the Collin

A growing number of homes in North Texas are being purchased by institutions rather than individuals. A report released in May by the National Association of Realtors shows Collin, Dallas, Denton and Tar- rant counties had among the highest percentage of institutional buyers of anywhere in the nation when it came to residential home sales last year. The association dened institu- tional buyers as companies, corpora- tions or limited liability companies. Tarrant County was the third highest in the nation with 52% of all home sales last year going to compa- nies, according to the report. Dallas County came in seventh with 43%, Denton County was 11th with 39%, and Collin County tied for 20th place with 34%, the report showed. Nationwide, institutional buyers made up 13% of the residential sales

42%

Properties are owned by a bank or short-sale buyers. Other

NUMBERS DO NOT ADD UP TO 100% DUE TO ROUNDING.

SOURCE: NATIONAL ASSOCIATION OF REALTORS COMMUNITY IMPACT NEWSPAPER

County Association of Realtors. “Where buyers will win is that overpriced homes are going to stand out much more if a home doesn’t sell due to price or condition,” Benat said. “Price can overcome a lot of conditions, but consumers should question why a particular home has longer days on market than compara- ble sales.” Umit Gurun, who holds the posi- tion as the Ashbel Smith professor of accounting at The University of Texas at Dallas, researched the trend of

institutional homebuyers in DFW. He said there were two main shifts in the marketplace with these institutional investors. One shift he observed is institutional owners’ ability to repair houses at cheaper prices. “[The other] is that they become a big landlord,” Gurun said. “So they become the biggest landlord in the area, which gives them pricing power, which means they can increase the rent at higher levels, so that is kind of a monopoly on pricing.”

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