What Proportion of Homes Are Investors Purchasing?

Are Major Investors Truly Acquiring All the Homes Today? If you're in the market for a house, you might be wondering about this. Perhaps you've come across articles or social media posts claiming that investors are buying up all the homes, making it harder for the average buyer to find what they're looking for. However, there's a lot of misinformation circulating. To clarify, here's the reality: much of the major investor activity has already passed.

The Wall Street Journal (WSJ) explains:

"During the pandemic, investors of all sizes spent billions purchasing homes. At their peak in 2022, they acquired over one in every four single-family homes sold. However, their activity has recently declined due to rising interest rates and tighter supply."

The main point is that investor activity has significantly decreased. Even at the peak of investor purchases, three out of every four single-family homes were bought by regular, everyday buyers, not investors. Furthermore, most of the investors who did buy in recent years were not the large-scale investors often mentioned. Instead, they were primarily small, mom-and-pop investors—individuals like your neighbors who may own just a few properties, such as their main residence and a vacation home.

But let's concentrate on the giant, mega-investor firms, as they are frequently discussed on social media. Mega investors, defined as those owning 1,000+ properties, might not be purchasing as many homes as you think. According to the Wall Street Journal, their home purchases are relatively limited (see graph below):

This graph reveals two key points. First, institutional investors have never purchased a large percentage of available homes. At their peak in 2022, they bought about 2% of single-family homes. Second, this percentage has decreased even further recently, becoming so small that it rounds down to 0%.

To understand why this percentage is declining, private lender RCN Capital surveyed investors about the challenges they’re encountering. Jeffrey Tesch, CEO of RCN Capital, shared their findings:

"Investors are currently dealing with numerous challenges in the housing market, including rising prices, limited inventory, and increased financing costs."

Recognizing these challenges is crucial because they demonstrate that large, mega investors are not dominating the housing market.

So, don't believe everything you hear. They aren't buying up all the homes and making it impossible for regular people to purchase.

Bottom Line

Large investors aren't purchasing all the homes available. If you have questions about the housing market, consult a local real estate agent. They can provide insights and help you understand the actual situation.