How Many Homes Are Investors Actually Buying?

How Many Homes Are Investors Actually Buying?

Are big investors really buying up all the homes today?

If you're in the process of searching for a house to purchase, you might be curious about something. It's possible that you've come across information or videos on social media claiming that investors buying up all the homes is exacerbating the challenge of finding what regular buyers desire. However, let me reveal a little secret - a considerable amount of misinformation is circulating. Allow me to clarify the situation and provide you with the actual facts. The significant investor activity that has been causing concern is mostly a thing of the past.

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 key here is investor activity has slowed significantly, and even during the peak of investor buying, 3 out of every 4 single-family homes purchased were by regular, everyday buyers – not investors. And of the investors who bought over the past few years, most weren’t the big investors you may be hearing about. The vast majority were small mom-and-pop investors – people like your neighbors who own only a couple of homes, maybe even just their main residence and a vacation home.

But let’s focus on the giant, mega-investor firms since that's what is being talked about so frequently on social media right now. Mega investors are those who own 1,000+ properties. You may be surprised to see that, according to the Wall Street Journal, they don’t buy all that many homes (see graph below):

This graph tells us two things. First, institutional investors were never buying a large percentage of available homes. During the peak in 2022, they bought about 2% of available single-family homes. Second, that percentage has gotten even smaller recently (so small the number rounds down to 0%).

In an effort to understand why that percentage is trending down, private lender RCN Capital asked investors about the challenges they’re facing. Here’s what Jeffrey Tesch, CEO of RCN Capital, found out:

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

Bottom Line

If you're curious about the claims surrounding the housing market and its big investors, I'd be happy to discuss and provide you with a clearer understanding of the reality. Let's have a conversation and address any questions you may have.