Investors snap up growing share of US homes

Los Angeles (AP) — Real estate investors are increasingly acquiring a larger portion of U.S. homes available for sale due to rising prices and persistently high borrowing costs, which have deterred numerous potential homebuyers.
According to a report by real estate data provider BatchData, nearly 27% of all homes sold during the first three months of the year were purchased by investors, the highest share in at least five years.
Between 2020 and 2023, the share of homes purchased by investors averaged 18.5%.
In total, investors acquired 265,000 homes during the January-March quarter, representing a 1.2% increase from the same period a year prior, the firm reported.
Despite the modest annual growth, the rise in the share of investor home purchases is more indicative of the housing market’s slowdown as traditional buyers encounter increasing affordability constraints.

The U.S. housing market has experienced a sales slump since early 2022, coinciding with the commencement of mortgage rate increases from pandemic-era lows. Home sales declined last year to their lowest level in nearly three decades.
The market has remained sluggish thus far this year, as many prospective homebuyers have been discouraged by elevated mortgage rates and home prices that have continued to rise, albeit at a slower pace.
As a result of the slowdown in home sales, properties are taking longer to be sold. This has led to a significantly increased inventory of homes available for purchase, benefiting investors and other home shoppers who can afford to circumvent current mortgage rates by paying in cash or utilizing home equity gains.

“As traditional buyers grapple with affordability challenges, investors with cash and financing advantages are intervening to sustain transaction volume,” the report states.
BatchData analyzes U.S. home sales records to ascertain which properties were purchased by investors. These properties may include vacation homes or rentals, but not primary residences.

Investors acquired 1.2 million homes in 2024, surpassing an average annual acquisition of 1.1 million homes since 2020, according to BatchData.
Despite this, investor-owned homes comprise approximately 20% of the nation’s 86 million single-family homes, the firm reported.
Among these investor-owned properties, small-scale investors, those owning between one and five homes, account for 85% of the total. Another 5% are owned by investors with between six and ten properties.
Institutional investors, those owning 1,000 or more homes, account for only about 2.2% of all investor-owned homes, the firm stated.
Furthermore, this figure may decrease, as there are indications that large institutional investors are reducing their home purchases.

According to data from Parcl Labs, out of a group of eight of the largest companies that own and lease single-family houses, including Invitation Homes and American Homes 4 Rent, six sold more homes during the second quarter than they purchased.


Original Article : AP News. By Alex Veiga