How Many Homes Are Investors Actually Buying?

How Many Homes Are Investors Actually Buying?

If you're in the market for a house, you might have heard rumors or seen social media posts claiming that big investors are buying up all the available homes, making it tougher for the average buyer to find what they're looking for. However, it's important to separate fact from fiction. While there's a lot of misinformation circulating, the truth is that much of the significant investor activity has already peaked and is now diminishing. Here’s the real situation: big investor purchases have largely moved past their high point and are no longer dominating the housing market as they once might have.

The Wall Street Journal (WSJ) explains:

“Investors of all sizes spent billions of dollars buying homes during the pandemic. At the 2022 peak, they bought more than one in every four single-family homes sold, though more recently their activity has slowed as interest rates rose and supply became tighter.”

The crucial point to understand is that investor activity in the housing market has significantly slowed. Even at the height of investor buying, three out of every four single-family homes were purchased by regular, everyday buyers—not investors. Furthermore, the majority of investors active over the past few years weren't the large-scale ones often discussed. Instead, they were predominantly small, "mom-and-pop" investors—people who might own just a few properties, such as their primary residence and perhaps a vacation home.

However, the focus often shifts to the large, mega-investor firms—those owning over 1,000 properties—especially in discussions on social media. It might come as a surprise, but according to the Wall Street Journal, these mega investors actually purchase relatively few homes, which is evident in the data shown in the accompanying graph:

The graph provides two key insights. First, institutional investors have never been the predominant buyers in the housing market. At their peak in 2022, they accounted for only about 2% of the available single-family homes. Second, their share of the market has decreased even further recently, to the point where it effectively rounds down to 0%.

To shed light on why this downward trend is occurring, private lender RCN Capital conducted a survey asking investors about the challenges they face. Jeffrey Tesch, CEO of RCN Capital, shared the findings from this inquiry:

“Investors are already facing many challenges in today’s housing market – rising prices, limited inventory, and higher financing costs.”

Understanding these challenges is important because they show big, mega investors aren’t taking over the housing market.

So, don't fall for everything you hear. They aren't snatching up all the homes and making it impossible for regular people to buy. 

Bottom Line

Big investors aren’t dominating the home-buying market. If you have concerns or questions about what you’ve heard regarding the housing market, let’s have a conversation. I can help clarify what’s really happening and provide you with accurate insights.