In the bustling landscape of real estate, a significant trend is emerging that encapsulates both opportunity and challenge for investors and homebuyers alike. Recent data reveals that during the second quarter of 2025, real estate investors—both individual and institutional—acquired a striking one-third of all single-family residential properties sold. This marks an increase from 27% in the first quarter and represents the highest percentage recorded in the past five years, according to a report from CJ Patrick Co., which utilized figures from the data provider BatchData.
Despite this upward trend in percentage share, the total number of homes purchased by investors has decreased, indicating a broader slowdown in the housing market. In fact, investor purchases fell by 16,000 homes compared to the same period last year, reflecting a general decline in home sales. This paradox highlights a crucial dynamic: while investors are capturing a larger slice of a shrinking pie, they continue to own approximately 20% of the 86 million single-family homes across the United States.
Ivo Draginov, co-founder and chief innovation officer at BatchData, emphasizes the dual role of investors in today’s market. “While investors purchased more homes than they sold in the second quarter, they did sell over 104,000 homes, with 45% of those sales going to traditional homebuyers,” he notes. This activity contributes to a much-needed injection of liquidity into a sluggish housing market, providing essential inventory for both rental properties and homes for owner-occupants.
Interestingly, the landscape of real estate investment is predominantly influenced by small investors, who own ten properties or fewer and account for over 90% of the market. In stark contrast, large institutional investors, those with portfolios exceeding 1,000 properties, comprise only 2% of all investor-owned homes. This distribution underscores the critical presence of individual investors in the real estate ecosystem, particularly as larger entities like Invitation Homes and American Homes 4 Rent have started to sell more properties than they acquire, a trend that has persisted for six consecutive quarters.
Rick Sharga, founder and CEO of CJ Patrick Co., sheds light on this shift, stating, “They’re not exiting the space, just diverting capital into build-to-rent communities. But this shift means less competition for small investors and traditional homebuyers, while also adding more rental supply, which is needed in today’s market where younger adults often opt to rent since they can’t afford to buy a home.” This trend reflects a broader societal shift where affordability remains a significant barrier for many potential first-time homebuyers.
Regionally, Texas, California, and Florida emerge as the states with the highest number of investor-owned homes, largely due to their significant populations. Conversely, states like Hawaii, Alaska, Montana, and Maine have high percentages of investor-owned homes, often driven by tourism. This geographical dichotomy hints at the varying strategies employed by investors based on local market dynamics.
When it comes to pricing, investors have traditionally gravitated towards lower-priced homes, which promise better returns on resale over time. In the second quarter of 2025, the average price paid by investors was $455,481—still below the national average of $512,800 but indicating an upward trend as home prices continue to rise. Smaller, less expensive properties also dominate the investor landscape, with large investors reporting an average purchase price of $279,889 and an average sale price of $334,787.
The concentration of institutional investors in the Midwest and South, where prices remain below the national average, further illustrates the evolving nature of the real estate market. As these investors pivot to build-to-rent developments, they inadvertently create more options for renters, which could alleviate some of the pressures felt by young adults navigating a tight housing market.
In conclusion, the current state of the real estate market is a complex tapestry woven from the actions of both individual and institutional investors. With shifting trends, varying regional dynamics, and a notable increase in rental supply, this evolving landscape offers a wealth of opportunities for savvy investors while posing challenges for prospective homebuyers. Understanding these nuances will be crucial for anyone looking to navigate the intricate waters of real estate in the coming years.
