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 the impact of investors on the housing market. You've probably seen social media posts or articles claiming that investors are making it harder for the average buyer to find a home. However, much of this information is misleading. Let's clear things up and examine what's really happening in the housing market. 

Investor Activity Has Slowed Down

During the pandemic, investors of all sizes spent billions buying homes. According to The Wall Street Journal (WSJ):

"Investors of all sizes spent billions of dollars buying home 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."

Even at the peak of investor buying, 75% of single-family homes were still purchased by regular buyers, not investors. Furthermore, most of the investors were small mom-and-pop investors, not the large mega-investors frequently mentioned in social media. 

The Role of Mega-Investors

Mega-investors are defined as those who own 1,000+ properties. Contrary to popular belief, these investors haven't been buying a significant percentage of homes. The Wall Street Journal provides insightful data. 

This graph highlights two key points:

1. Institutional investors were never buying a large percentage of available homes. At their peak in 2022, they bought about 2% of available single-family homes.

2. Their activity has decreased even further recently, with their current purchases being negligible.

Challenges Faced by Investors

To understand the decline in investor activity, private lender RCN Capital surveyed investors about the challenges they 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 indicate that large investors are not dominating the housing market as some narratives suggest. 

In Conclusion

Big investors aren't buying all the homes out there. If you're hearing claims about investors making it impossible for regular people to buy homes, it's important to consider the full picture. Investor activity has slowed significantly, and the majority of homes are still being bought by everyday buyers. 

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