Big investors are indeed playing a significant role in the current real estate market

If you're in the market to buy a house, you might be concerned about the impact of investors buying up properties. However, there's misinformation circulating about this issue. The big investor activity has largely already occurred and is not as prevalent as some sources suggest.

The Wall Street Journal clarifies the explanation as follows:

““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.”
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— Wall Street Journal (WSJ)

The rate of investor activity has decreased notably. Even when investor purchases were at their highest, 3 out of every 4 single-family homes were bought by regular buyers, not investors. Most of the investors weren't large institutional investors but rather small mom-and-pop investors, similar to your neighbors who may own just a couple of properties, including their primary residence and a vacation home.

According to the Wall Street Journal, giant mega-investor firms, which are defined as those owning 1,000+ properties, surprisingly do not purchase a significant number of homes, as depicted in the graph below.

Institutional investors did not purchase a significant amount of available homes. In 2022, they bought around 2% of single-family homes at the peak. Recently, this percentage has decreased further, nearing 0%.

In an attempt to grasp the reason behind the downward trend of that percentage, private lender RCN Capital surveyed investors to identify the obstacles they are encountering. According to Jeffrey Tesch, CEO of RCN Capital, here are the findings:

““Investors are already facing many challenges in today’s housing market – rising prices, limited inventory, and higher financing costs.”
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— Jeffrey Tesch, CEO of RCN Capital

Understanding these challenges is crucial as they indicate that large institutional investors are not dominating the housing market.

It's important not to believe everything you hear. The idea that all homes are being quickly bought up, making it unattainable for regular people to purchase, is not entirely accurate.

Bottom Line

Big investors aren't snatching up all the homes. If you're curious about all the talk on the housing market, let's talk. I'll help clear up what's actually happening.