Real estate activity saw a significant shift in the second quarter of 2025, with investors, both individual and institutional, accounting for one-third of all single-family residential property sales. This percentage marks an increase from 27% in the first quarter of the year and represents the highest share of investor purchases in the last five years, as detailed in a report from CJ Patrick Co., which utilized data from BatchData, a real estate analytics provider.
Despite the growth in the proportion of investor purchases, the number of homes bought by these investors decreased by 16,000 compared to the same time last year. This decline in raw numbers can be attributed to a general slowdown in home sales across the market. Currently, investors hold approximately 20% of the 86 million single-family homes nationwide.
Ivo Draginov, co-founder and chief innovation officer at BatchData, noted that while investors did buy more homes than they sold in the second quarter, they still recorded over 104,000 sales, with 45% of those transactions going to traditional homebuyers. This dynamic underlines the critical role that investors play in providing necessary liquidity amid a sluggish home sales environment, while simultaneously increasing the inventory of both rental properties and homes available for owner-occupants.
Interestingly, although large institutional investors have captured the media spotlight in the single-family rental market, small investors—many of whom own ten properties or fewer—constitute over 90% of all investor activity. In contrast, the largest investors, managing portfolios of 1,000 or more homes, account for merely 2% of all investor-owned residences.
Institutional investors have diverged from the trend, showing a consistent pattern of selling more properties than they acquire for six consecutive quarters. Major players in the market, including Invitation Homes and Progress Residential, have shifted their focus towards build-to-rent communities rather than exiting the sector entirely. This change may lead to reduced competition for smaller investors and traditional homebuyers while simultaneously contributing to increased rental supply, which is particularly beneficial in today’s market, where a significant number of younger adults are opting to rent rather than buy.
Regionally, the states of Texas, California, and Florida lead in the number of investor-owned homes, primarily due to their large populations. Conversely, states like Hawaii, Alaska, Montana, and Maine exhibit the highest percentages of investor-owned properties, correlating with their tourism-heavy economies.
Investors typically target lower-priced homes due to the potential for optimal resale profits in the future. In the second quarter of 2025, investors paid an average of $455,481 per home, below the national average price of $512,800. This figure, however, marks the highest average purchase price for investors in six quarters, reflective of the overall increase in home prices. Individual investors generally pursue smaller or more affordable housing options, while large investors tend to favor even cheaper homes, with average purchase and sale prices considerably lower than those of the broader market.
Overall, while the landscape of real estate investment is shifting, with varying motivations and strategies at play, the necessity for affordable housing solutions remains a pressing issue in today’s market context.
