Real estate investors made up one-third of buyers for single-family residential properties in the second quarter of 2025. That’s the highest percent in the last five years, according to an analysis from BatchData (1).
This is a jump from the first quarter of 2025, when investors bought 27% of single-family homes.
But the actual number of homes bought by investors is lower than last year; investors purchased 16,000 fewer homes as compared to the second quarter of 2024. Home sales have been weaker overall this year, which is why the share bought by investors has inched up.
So are investors driving up prices and keeping owner-occupant home buyers out of the market? Not so fast, according to the analysis.
There are about 86 million single-family homes in the United States. But they’re not all owned by the families that live in them. In fact, about 20% of the single family homes in America are owned by investors.
You may be left with an image of private equity firms dominating the housing market, snapping up homes left and right.
In fact, it’s small investors — defined as individuals with fewer than 11 properties — who dominate, according to the BatchData analysis. Small investors make up 91% of investor-owned homes.
So while mom-and-pop investors dominate this market, that may lead the average American to assume that this type of investment is sure-fire: A way to diversify the investment portfolio and shore up a retirement fund. Is it a safe bet for profitability? Here’s our analysis.
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How does investor activity affect the housing market?
Large institutional investors (firms that own 1,000 or more properties) made up less than 2.5% of purchases. Institutional investors own 2% of the total market, BatchData found.
The analysis also found that institutional investors are retreating from the existing single-family home market, instead shifting their focus to new-build, purpose-built rental properties.
What states have the highest number of investor-owned homes? According to a CNBC report (2), Texas, California and Florida have the highest overall number of investor-owned homes, namely because they have the biggest populations.
By contrast, states with heavy tourism have the highest share per capita of investor-owned homes: Hawaii, Alaska, Montana and Maine.
According to the aforementioned BatchData, investors are stepping in to fill the gap left by homebuyers who can’t afford the high mortgage rates that have been persistent since 2022.
Investors are more likely to make cash purchases (62.3% of investors made cash purchases in 2024), and their participation in the market may actually be stabilizing the housing market by “maintaining market liquidity,” the report says.
What are the pros and cons of investing in real estate?
If you are thinking of becoming a real estate investor, there is a lot to consider. Real estate has typically been viewed as a more stable investment, due to steady appreciation in home values and the fact that you can earn passive income from rentals. However, like most investments, there is still risk involved.
One benefit of real estate is that it can be a hedge against inflation in your portfolio, as it typically keeps pace with inflation.
Real estate can also potentially generate cash flow, if the monthly rent that you charge tenants more than covers the cost of maintenance, taxes and, if applicable, your mortgage.
One con of real estate investing is that it may require a significant amount of time. If you are managing a rental property yourself, you will be required to deal with maintenance and upkeep issues, unless you also opt to pay a property management company.
Real estate is also far less liquid than typical investments like stocks, and there is also a significant cost to sell. Real estate markets can also be cyclical.
Recent downturns in markets in the Sunbelt, for example, point to the fact that the market doesn’t guarantee future increases in property value (3). As with other investment types, it pays to do a significant amount of research before you invest your capital in buying property.
Read More: Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Is now the time to jump into real estate?
Is now a good time to buy? That depends on where you are thinking of purchasing a home, as well as how you’ll make your purchase. Housing inventory has increased nationally, but remains below pre-pandemic levels, according to Realtor.com’s monthly market report for September (4).
Increases in inventory are uneven across the country, with the South and West above pre-pandemic levels. Prices per square foot are climbing in the Northeast and Midwest, and falling in the South and West, the report says.
Another major factor to consider is mortgage rates. If you are not able to purchase in cash, consider that mortgage rates have remained high since 2022, when the average 30-year fixed-rate mortgage climbed from 3.56% in January to 6.31% in December.
Average rates have not fallen below 6% since, and some experts say that rates will stay in the mid-6% range for the rest of 2025 (5).
If you are considering buying, and would require a mortgage, investigate whether rent prices for the area would generate positive cash flow (your expenses would not exceed rental income).
Also, be aware that insurance rates for homes have also increased dramatically in recent years, especially in areas that face climate-change fueled extreme weather events.
Remember that no investment is risk-free. Consider whether you would be able to afford the upkeep and maintenance of a property, even if you had to weather an extended period without tenants, a rise in interest rates, or a market downturn.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
BatchData (1); CNBC (2); Business Insider (3); Realtor.com (4); Forbes (5).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.