Where Are Big Investors Buying the Most Homes?

Abstract

Institutional investors made up about 13% of home sales in 2021, according to a recent report from the National Association of Realtors®. "The presence of institutional buyers when there's a limited supply of homes for sale is one more challenge that is piling up for first-time homebuyers," says Gay Cororaton, a senior economist at the NAR. "Investors tend to pay in cash, and sellers like that. This is really hurting first-time buyers." To figure out where investor purchases made up the largest percentage of home sales, NAR analyzed property deed records from Black Knight and looked at real estate market data from the U.S. Census Bureau's American Community Survey. "That's where the jobs are. That's where the market opportunities are." Institutional investors paid about 26% less for those homes than the median purchase price in the states where those properties were located, according to the report. Home sellers were more likely to accept their offers because they paid in cash, bought the homes as is, and provided a guaranteed purchase date. About 42% of the single-family homes bought by investors were turned into rentals. "So if more and more institutional investors are purchasing the limited number of homes on the market, this means limited opportunities for regular folks to build wealth." Large investors are heading to areas that have larger millennial, renter, and minority populations and where lots of folks are coupling off to form new households. "Institutional investors are saying prices are rising, mortgage rates are rising so more people will want to rent. But they're taking away opportunities from homebuyers."