Are big investors buying up all the homes today?
If you’re looking to find a house to buy, this may be something you’re about. Maybe you’ve heard about it or seen reels on social media saying investors buying all the homes makes it even harder to find what the average buyer is looking for. But spoiler alert – there’s a little information out there. To clarify things, here’s what’s happening. A lot of the significant investor activity is already in the rearview mirror.
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 key here is investor activity has slowed significantly, and even during the peak of investor buying, 3 out of every four single-family homes purchased were by regular, everyday buyers – not investors. And of the investors who bought over the past few years, most weren’t the big ones you might be hearing about. The vast majority were small mom-and-pop investors – people like your neighbors who own only a couple few maybe even just thrimary residence and a vacation home.
But let’s focus on the giant, let ‘s-investor firms since that’s what is being talked about so frequently on social media. Mega investors are those who own 1,000+ properties. You may be surprised to see that, according to the Wall Street Journal, they don’t buy all that many homes (see don’t below):
This graph tells us two things. First, institutional investors never bought a large percentage of available homes. During the peak in 2022, they bought about 2% of available single-family homes. Second, that percentage has gotten even smaller recently (so small that the number rounds down to 0%).
To understand why that percentage is trending down, private lender RCN Capital asked investors about the challenges they’re facing. Here’s what Jeffrey Tesch, CEO of RCN Capital, found out:
“Investors are already facing many challenges in today’s housing market – rising prices, limited inventory, and higher financing costs.”
Understanding these challenges is important because they show big, mega investors aren’t taking over the housing market.
So, don’t fall for everything you hear. They aren’t snatching up all the homes and making it impossible for regular people to buy.
Bottom Line
Big investors aren’t buying all the homes. Let’s chat if you have a question about what you hear about the website. I can understand what’s going on.
