Are big investors really buying up all thehomestoday?

If youre trying to find ahouse to buy, this may be something youre wondering about. Maybe youve read about it or seen reels on social media saying investors buying all the homes is making it even harder to find what the average buyer is looking for. But spoiler alert theres a lot of misinformation out there. To clear things up, heres the scoop on whats really happening. A lot of the big investor activity is actually in the rearview mirror already.

TheWall 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, thoughmore 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 4 single-family homes purchased were by regular, everyday buyers not investors. And of the investors who bought over the past few years, most werent the big investors you may be hearing about. The vast majority were small mom-and-popinvestors people like your neighbors who own only a couple of homes, maybe even just their main residence and a vacation home.

But lets focus on the giant, mega-investor firms since thats what is being talked about so frequently on social media right now. Mega investors are those who own 1,000+ properties. You may be surprised to see that,accordingto theWall Street Journal, they dont buy all that many homes (see graph below):

This graph tells us two things. First, institutional investors were never buying 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 the number rounds down to 0%).

In an effort to understand why that percentage is trending down, private lenderRCN Capitalasked investorsabout the challenges theyre facing. Heres what Jeffrey Tesch, CEO ofRCN Capital, found out:

Investors are already facing many challenges in todays housing market rising prices, limited inventory, and higher financing costs.

Understanding these challenges is important because they show big, mega investors arent taking over the housing market.

So, dont fall for everything you hear. They arent snatching up all the homes and making it impossible for regular peopleto buy.

Bottom Line

Big investors arent buying all the homes out there. If you've got questions about what you're hearing about thehousing market, call me, Marie McLaughlin, your local real estate agent.

Source:https://www.keepingcurrentmatters.com/2024/05/22/how-many-homes-are-investors-actually-buying/