Texas has a housing problem because Texas has a growth problem — and as problems go, that’s not a bad one.
People and businesses continue moving here because Texas is hospitable. We purposely create and maintain conditions that welcome families, workers, businesses, and investors.
But population growth creates demand for housing, and supply must keep pace.
Concerns about housing have not been limited to Texas, however, and this led to a debate in Congress over what the federal government could do to encourage more housing construction and availability.
Part of that debate was about institutional ownership of single-family homes, a moral panic that was based more on anecdote than on substance. Texas lawmakers who campaigned on stopping large institutional investors from buying more single-family homes demanded federal action, and they got it. The bill passed Congress and became law July 11.
So, when the Texas Legislature returns to session in January, state lawmakers should look beyond re-litigating institutional homeownership and focus on changes at the state and local level that will truly make housing more available and affordable.
Further restricting private capital in the housing market could create two problems. It could unnecessarily duplicate federal law, adding more layers of compliance, uncertainty and legal risk for builders and investors. If the state goes further than Congress did, it could complicate a carefully negotiated federal compromise with a contradictory state law.
Texas has built its economic model in part on encouraging investment and being less hostile to capital than competing states. The result has been obvious. But capital is mobile and impatient. If Texas imposes additional and possibly more restrictive layers of regulation on single-family rental investment, that money will go somewhere else.
That would particularly damage the build-to-rent market, which is about financing and constructing new housing, not about buying up existing homes. Adding regulatory friction to housing construction would discourage building.
The provisions in the federal legislation for build-to-rent and renovate-to-rent activity were careful compromises that reflected economic analysis and industry input. Buying an existing home and converting it to a rental is very different from financing an entirely new neighborhood of rental homes.
A new law written during Texas’s compressed legislative session could easily blur that distinction. In trying to one-up the federal government, lawmakers could end up discouraging precisely the kind of investment Texas needs most.
Besides, institutional investors are not the principal cause of Texas’s housing-affordability problem. Their share of the national single-family rental market remains in the low single digits. In Texas, it’s less than 1%. The real problems are less dramatic but more difficult.
Raising the cost of materials through tariffs didn’t help, but most other factors related to housing costs are state and local. Permitting delays slow construction. Local land-use restrictions limit what can be built where. High property taxes affect nearly every homeowner and renter, not just the tiny portion of the market touched by institutional buyers.
These are issues state and local lawmakers can actually do something about.
Institutional investors are a useful caricature to scapegoat. It is easier to blame rich, impersonal fat cats than to do the hard work of fixing permitting systems, restraining property taxes, and loosening zoning and land-use restrictions. And Congress has already dealt with the investor question.
Texas lawmakers raised a legitimate concern, and surprisingly, the federal government acted. Now it is time to move on to the parts of the housing crisis federal law cannot address.
Too often, Texas lawmakers spend their limited legislative time passing useless bills designed to appease voters or defy Washington without regard to solving actual problems.
If Texas legislators really want to make housing more affordable and more abundant, they should focus on permitting reform, local zoning and land-use restriction, property taxes and property insurance. Because that’s where the real potential for improvement lies.
July 23, 2026