Investors Dominate Buyer Market with 5-Year High
Recent statistics show a significant shift in the real estate market, with investors dominating the buyer market at a five-year high. In the second quarter of 2025, both individual and institutional investors accounted for one-third of all single-family residential property sales. This figure marks an increase from 27% in the first quarter of this year, as reported by CJ Patrick Co. using data from BatchData.
Investor Activity in the Housing Market
Throughout 2024, investors represented 25.7% of residential home sales. However, despite the increased share, the actual number of homes purchased has declined. In the second quarter of 2025, investors acquired 16,000 fewer homes than the previous year. This downturn is primarily due to an overall weakening of home sales nationwide.
Currently, investors own approximately 20% of the 86 million single-family homes across the United States. Ivo Draginov, co-founder and chief innovation officer at BatchData, noted that in addition to buying more homes than they sold, investors sold over 104,000 homes in the second quarter. Notably, 45% of these sales went to traditional homebuyers. This influx of investor activity is providing essential liquidity to a challenging market.
Role of Small Versus Large Investors
While large institutional investors have garnered attention, small investors, defined as those owning ten properties or fewer, make up over 90% of the investor market. Conversely, the largest investors, those with 1,000 or more properties, represent only 2% of all investor-owned homes. Interestingly, institutional investors have been selling more homes than they purchase for six consecutive quarters, reflecting a strategic shift rather than an exit from the market.
Companies like Invitation Homes, Progress Residential, American Homes 4 Rent, and FirstKey Homes are focusing on redirecting their capital into build-to-rent communities. This trend may result in reduced competition for small investors and traditional buyers, while simultaneously increasing rental supply, which is crucial given the growing number of younger adults opting for rentals.
Regional Insights on Investor Activity
Geographically, Texas, California, and Florida have the highest concentrations of investor-owned homes due to their large populations. In terms of percentage of homes owned by investors, states like Hawaii, Alaska, Montana, and Maine lead the pack, largely driven by tourism.
Pricing Trends Among Investors
Investors typically target lower-priced homes perceived to yield better long-term profits. In the second quarter of 2025, the average purchase price for investor-owned homes was $455,481, notably below the national average of $512,800. This represents the highest average purchase price for investors in the past six quarters.
- Average investor purchase price: $455,481
- National average home price: $512,800
- Average purchase price for large investors: $279,889
- Average sale price for large investors: $334,787
Overall, while the overall home sales market remains sluggish, the investor sector appears to be leveraging opportunities, marking a new phase in real estate dynamics.
