Investors buy growing share of homes as many struggle to afford one
By ALEX VEIGA, AP Business Writer
LOS ANGELES (AP) — Real estate investors are increasingly dominating the U.S. housing market, with nearly 27% of all homes sold in the first quarter of the year being purchased by investors, the highest share in at least five years, according to a report by BatchData.
Between 2020 and 2023, investors typically bought around 18.5% of homes on the market, but this year, that number has significantly increased. Despite a modest annual rise in investor home purchases, the trend reflects the challenges traditional homebuyers face due to rising prices and borrowing costs.
With the housing market slowing down since 2022, investor purchases have surged as traditional buyers struggle with affordability constraints. The increase in investor activity has been fueled by a decline in home sales, longer selling times for properties, and a larger inventory of homes on the market.
Investors bought 265,000 homes in the first quarter of this year, marking a 1.2% increase from the same period last year. The demand for investor-owned homes has remained strong, with 1.2 million homes purchased in 2024, up from an average of 1.1 million homes annually between 2020 and 2023.
However, despite the rise in investor-owned homes, they still represent only about 20% of the nation’s 86 million single-family homes. Mom-and-pop investors owning between 1 and 5 properties make up the majority of investor-owned residential properties, while institutional investors owning 1,000 or more homes account for a smaller percentage.
There are signs that large institutional investors are scaling back on home purchases, with data showing that six out of eight major companies that own and lease single-family houses sold more homes in the second quarter than they bought.
Overall, the real estate market continues to face challenges with elevated mortgage rates and climbing home prices, which have deterred many prospective homebuyers. As a result, investors with cash and financing advantages are stepping in to maintain transaction volume, according to BatchData.
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