Texas developers are unhappy about having to compete with institutional investors in the Lone Star State’s burgeoning single family build-to-rent sector.
Publicly-traded single family rental companies, along with institutional investors, are pouring billions of dollars into the Lone Star State’s major real estate markets to get a piece of Texas’ single-family rental market through buying existing homes or building new subdivisions of homes for rent.
“What we see right now is basically a lot of institutional money is building entire subdivisions to be investment/rental communities, and they’re essentially competing with us,” Don Allen, the incoming president of the Texas Association of Builders said at a June 23 event about housing affordability in Fort Worth that was sponsored by the Fort Worth Report.
“And so we’re not real happy about that as an industry, and it’s something that we do struggle with.”
The Texas Association of Builders is a trade group representing most of the state’s local and regional builders, developers and suppliers.
Texas developers are also struggling with construction costs and delays, Allen added.
The rising price of lumber adds close to $19,000 to the cost of a new home, according to the National Association of Home Builders (NAHB).
Every time a home price rises $1,000 in the Dallas-Fort Worth market, 2,800 households in the area are priced out, according to data compiled by the NAHB.
In 2021, investors bought more than half of all Fort Worth homes for sale.
These factors have decreased the available homes to sell by realtors to prospective individual homebuyers, and particularly hurts first-time homebuyers, Carlene Thomas-King, a Fort Worth realtor told event attendees.
“This is the most frustrating time in all my years of being in real estate,” Thomas-King said. “Our clients are not able to compete with the investors that have cash in their pockets, even those that are approved. We’re not even assessed.”
Amy Connolly, an assistant director for the city of Fort Worth’s Neighborhood Services told event attendees that the city could provide affordable housing to people for 30 to 50 years but Fort Worth’s leaders would have to use the power of local government and leverage federal resources to make that a reality.
Fort Worth’s city council could offer incentives for developers to set aside affordable housing units or lots, allow the Fort Worth Housing Finance Corp. to subsidize housing developments, align city policies with federal and state policies to receive more federal tax credits and zone the city to allow different types of housing. Connolly said.
[Fort Worth Report] — Karn Dhingra