Investors snap up growing share of U.S. homes as traditional buyers struggle to afford one

Los Angeles (AP) As growing prices and unyieldingly high financing costs keep many other potential homebuyers from purchasing, real estate investors are grabbing a larger portion of available homes in the United States.

According to a research by real estate data company BatchData, investors purchased about 27% of all properties sold in the first three months of the year, the largest percentage in at least five years.

The percentage of properties purchased by investors averaged 18.5% between 2020 and 2023.

According to the company, investors purchased 265,000 residences overall during the January–March quarter, a 1.2% rise over the same time last year.

According to BatchData, the increase in the proportion of investor house purchases, despite the slight yearly gain, is more indicative of how much the housing market has slowed as regular buyers confront increasing affordability restraints.

Since early 2022, when mortgage rates started to rise from pandemic-era lows, the U.S. housing market has been seeing a decline in sales. Last year, home sales dropped to their lowest point in almost three decades.

They have been modest so far this year because high mortgage rates and steadily rising, albeit slower, property prices have deterred many potential homeowners.

Properties are taking longer to sell as house sales have stalled. Investors and other homebuyers who can afford to purchase in cash or take advantage of home equity increases to avoid paying the present mortgage rates would benefit from the much increased number of homes on the market as a result.

According to the research, investors with cash and financing advantages are stepping in to sustain transaction volume as conventional buyers struggle with affordability.

To ascertain which properties were bought by investors, BatchData examines U.S. house sales data. These might be rental properties or vacation homes, but they wouldn’t be a homebuyer’s permanent residence.

According to BatchData, investors purchased 1.2 million properties in 2024, up from an average of 1.1 million residences annually starting in 2020.

However, according to the business, about 20% of the 86 million single-family houses in the country are held by investors.

Of those, 85% of all investor-owned residential properties are owned by mom-and-pop investors, or those with one to five properties, and 5% are owned by those with six to ten properties.

According to the business, only around 2.2% of all investor-owned homes are owned by institutional investors that own 1,000 or more properties.

And given indications that big institutional investors are reducing their house purchases, that number may decline.

According to statistics from Parcl Labs, six of the eight largest single-family home ownership and leasing companies—including Invitation properties and American Homes 4 Rent—sold more properties in the second quarter than they purchased.