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 trying to find a house to buy, you might be wondering about this. Perhaps you've read about it or seen social media posts claiming that investor activity is making it harder for the average buyer to find a home. But spoiler alert—there’s a lot of misinformation out there. To clear things up, here's the scoop on what's really happening: much of the big investor activity is actually in the rearview mirror.

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

However, let’s focus on the giant, mega-investor firms since they are frequently discussed on social media. Mega investors are those who own 1,000+ properties. You might be surprised to learn that, according to the Wall Street Journal, these mega investors don't actually buy that many homes (see graph below):

This graph tells us two things. First, institutional investors were never purchasing a large percentage of available homes. At their peak in 2022, they bought about 2% of available single-family homes. Second, that percentage has recently become even smaller, so small that it rounds down to 0%.

To understand why this 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.”

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 buying all the homes out there. If you have questions about what you’re hearing regarding the housing market, let’s chat. I can help you understand what’s really going on.