Are big investors really snapping up all the homes on the market today?

If you're in the market for a new house, this might be a question you're asking yourself. Perhaps you've read articles or seen social media posts suggesting that investors are purchasing all the homes, making it tougher for the average buyer to find a place. However, there's a lot of misinformation circulating. Let's clear things up with the real facts. Much of the intense investor activity is now behind us.

According to the Wall Street Journal (WSJ):

“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 here is that investor activity has significantly decreased. Even at the height of investor purchases, 75% of single-family homes were still bought by regular, everyday buyers, not investors. Additionally, most of the investors in recent years were small-scale, mom-and-pop investors—ordinary people who might own just a couple of properties, such as their main home and perhaps a vacation home.

Now, let’s talk about the large, mega-investor firms, since these are often the focus on social media. Mega investors are those owning 1,000 or more properties. Surprisingly, the Wall Street Journal reveals that these large investors don't purchase as many homes as you might think:

The accompanying graph illustrates two key points. First, institutional investors never bought a significant percentage of available homes. At their peak in 2022, they acquired only about 2% of available single-family homes. Second, this percentage has decreased even further recently (so much that it rounds down to 0%).

To understand why this trend is declining, private lender RCN Capital investigated the challenges investors face. Jeffrey Tesch, CEO of RCN Capital, explained:

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

These challenges highlight that large, mega investors aren't dominating the housing market as some might think.

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

Bottom Line

Big investors aren't buying up all the homes. If you have questions about the housing market and what you're hearing, let's talk. I can help you get a clear picture of what's truly happening.