Are major investors actually purchasing most of the homes in today's market?
If you're in the market for a new home, you might be wondering about this. You might have seen stuff online about big investors buying up all the homes and making it super hard for regular buyers. But guess what? A lot of that hype is old news.
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 important thing to note is that investor activity has decreased a lot. Even when investors were buying the most, 3 out of 4 single-family homes were bought by regular folks, not investors. And most of the investors who did buy homes weren't the big shots you hear about. The majority were small mom-and-pop investors – just regular people who own a few homes, maybe their own place and a vacation home.
But let's hone in on the huge mega-investor firms that are all the rage on social media right now. These are the players with 1,000+ properties in their portfolios. You might be surprised to find out that, as per the Wall Street Journal, they don't actually snap up a ton of homes (see the graph below):
This graph reveals two key points. Firstly, institutional investors were never acquiring a significant percentage of the homes on the market. At their highest point in 2022, they purchased approximately 2% of the available single-family homes. Secondly, that percentage has since decreased even further (so much so that the number rounds down to 0%).
To figure out why that percentage is dropping, private lender RCN Capital surveyed investors to uncover the hurdles they're encountering. Here's what Jeffrey Tesch, CEO of RCN Capital, discovered:
“Investors are already facing many challenges in today’s housing market – rising prices, limited inventory, and higher financing costs.”
It's important to get a handle on these challenges because they prove that the big mega investors aren't actually taking over the housing market.
So, don't be fooled by everything you hear. They're not grabbing all the homes and making it impossible for regular people to buy.
Bottom Line
Major investors aren't buying up all the homes out there. If you have questions about what's happening in the housing market, reach out to us, and we can provide you with your real estate needs.
For more info and to schedule a meeting, email us at [email protected]
