The housing market isn’t as hot for investors as it used to be.
High mortgage rates and sky-high home prices seem to be cooling down their excitement for buying homes.
But don’t get too excited just yet competition for affordable homes is still fierce, especially for first-time buyers.
Investors Are Pumping the Brakes
A new report from CoreLogic shows that while investor activity picked up a little between the second and third quarters of this year, their overall share of the market dropped compared to last year.
Investors made up 25% of the market this year, down from 28% in 2023.
Experts don’t expect this number to change much unless mortgage rates drop significantly.
“Right now, with high interest rates, expensive housing, and an uncertain economy, there’s not much pulling investors back in full force,” said Thomas Malone, the report’s author.
The Big Rush Is Over
When mortgage rates were super low a few years ago, investors flooded the market.
Back then, their share of the market climbed from under 20% pre-pandemic to almost 30% at its peak in January 2024.
But now, as rates stay high and the market slows down, those days seem long gone.
Affordable Homes Are Still a Battleground
Even with fewer investors buying homes, the report says they’re still crowding the lower-price market.
This is where first-time buyers, many with tight budgets, are trying to break in.
Unfortunately, “mom-and-pop” investors—those who own a few properties—are scooping up many of these homes.
These smaller-scale investors make up 60% of investor purchases, and their role in the market is bigger than most people realize.
They’re keeping home prices higher, even though fewer homes are being sold overall.
On the other hand, mega investors—big companies that own thousands of properties barely make a dent in the market.
In Los Angeles, where 42% of home purchases are by investors (the highest in the U.S.), only 2% come from mega investors.
Our Take
The housing market is still tough for everyday buyers.
While the slowdown in investor activity might look like a good sign, smaller investors are still snapping up affordable homes, making it hard for first-time buyers to compete.
It’s also wild to think how much small-time investors shape the market.
They’re like the silent powerhouses keeping prices high while the big corporations get all the blame.
So, if you’re looking to buy your first home, it’s still going to be a challenge—but at least the competition is shifting.
What do you think? Should small investors back off to give first-time buyers a better shot? Or is this just how the market works?