Investors now make the largest share of homebuyers in 5 years. Is it time for you to invest in real estate?

Core Insights - The article discusses the current state of investor-owned homes in the U.S., highlighting that Texas, California, and Florida have the highest number of such homes due to their large populations [1] - Institutional investors are shifting their focus from existing single-family homes to new-build, purpose-built rental properties, indicating a retreat from the traditional market [1][7] Investor Composition - Small investors, defined as individuals owning fewer than 11 properties, dominate the market, accounting for 91% of investor-owned homes [3] - Large institutional investors, owning 1,000 or more properties, represent less than 2.5% of purchases and own only 2% of the total market [2] Market Dynamics - Approximately 20% of the 86 million single-family homes in the U.S. are owned by investors, but the impact on home prices and owner-occupant buyers is not straightforward [4] - In the second quarter of 2025, real estate investors made up one-third of buyers for single-family residential properties, the highest percentage in five years [6] Recent Trends - Investors purchased 16,000 fewer homes compared to the second quarter of 2024, reflecting a general weakness in home sales this year [5] - The share of homes bought by investors has increased due to high mortgage rates, which have made it difficult for traditional homebuyers to enter the market [7][12] Regional Insights - States with heavy tourism, such as Hawaii, Alaska, Montana, and Maine, have the highest per capita share of investor-owned homes [6] - Inventory increases are uneven across the U.S., with the South and West above pre-pandemic levels, while prices per square foot are rising in the Northeast and Midwest [12] Economic Considerations - High mortgage rates have persisted since 2022, with the average 30-year fixed-rate mortgage rising from 3.56% in January to 6.31% in December [12][13] - Investors are more likely to make cash purchases, with 62.3% of investors doing so in 2024, which may help stabilize the housing market [7]