AUSTIN (KXAN) — Travis County and Williamson County rank high in the rate of corporate-bought homes above the national average, according to a May study from the National Association of Realtors. 

Nationwide, about 15% of single-family home purchases last year were from institutional buyers, the study said. Institutional buyers include companies, corporations or limited liability companies.

Ashley Jackson, the Austin Board of Realtors president-elect, said institutional buyers are mostly large, national brokerages that buy and sell houses, typically quickly and in cash.

Texas ranked as the state with the highest rate of institutional buyers (28%) followed by Georgia (19%), Oklahoma (18%), Alabama (18%), Mississippi (17%) and Florida (16%). Texas also saw a 4.6% increase from 2020 to 2021 in the institutional buyer market share, the study showed.

Other counties in Texas with large shares of institutional buyers are Tarrant, Rockwall, Midland, Dallas, Denton, Harris, Kaufman and Collin counties.

“I look at it as just another factor that’s playing into our crazy marketplace,” Jackson said. “We’ve always had cash buyers, but now it’s just a different kind of cash buyer. You know, we see those signs in the corners, like ‘I buy houses’… that’s always been present in our marketplace.”

Increased competition

The low inventory in the Austin metro is the major issue that drives the competition between institutional buyers and traditional buyers, which would increase opportunities for all buyers.

Jackson also said buyers saw the market as a stock marketplace instead of a housing marketplace.

“It definitely has increased competition in the area marketplace and has made it a little bit harder for traditional buyers to get into homes at that time,” Jackson said. “But that has been easing up as we have an increasing inventory right now.”

Jackson said she has seen increasing numbers of institutional buyers, including in her own neighborhood. The pandemic increased the numbers of these buyers because selling quickly and for cash was appealing to sellers—especially as homeowners were hesitant to let a lot of buyers walk through their houses.

The national study showed that states with higher-than-average institutional buyers also had higher median sale prices—an increase of about $23,600. However, the study found the median price of property bought by investors was 26% lower than the state median price—possibly caused by lower-quality homes purchased for home flips.

Additionally, fast-growth areas—like Williamson County—saw higher numbers of home investors. Jackson said, anecdotally, that there are more institutional buyers in suburbs. She said she has helped buyers purchase homes from institutional buyers outside the urban area of Austin like the Round Rock, Pflugerville and Manor areas.

“I think a lot of that has to do with pricing in the suburbs,” Jackson said. “You’ll find more of our entry-level pricing, and that’s where institutional buyers have been more active.”

As Jackson has seen personally, sometimes institutional buyers will send mailers to entire neighborhoods with offers to purchase their homes.

“I do know that a lot of sellers who see it as an option now like ‘Well, if my house isn’t selling right away, then I can turn to an I-buyer and see and see if they’ll buy it in my own neighborhood.'”

Impact on renters

Some properties that institutional buyers purchase end up as rental properties. The study showed that 42% of reported single-family purchases by corporate investors were converted to rentals.

“I have seen that in our marketplace as the home has lingered, perhaps because it has conditioned issues that a regular consumer didn’t really want to deal with, sometimes they get snatched up and they become rental properties,” Jackson said.