Who's Really Buying Up America's Homes? Separating Fact from Fiction

The current real estate landscape has generated a lot of buzz, with headlines often suggesting that large institutional investors, including Wall Street firms, are snapping up homes across America at an unprecedented rate. If you're in the market for a new home, you might be wondering whether these reports are accurate and how they could impact your home-buying journey. In this article, we delve into the data to uncover the truth behind the headlines and provide a clear picture of who's really buying up homes in the United States.

The Scope of Single-Family Homes

Before we delve into the details, let's establish the scope. According to SFR Investor, an authority in the single-family rental market, there are a staggering eighty-two million single-family homes in the United States. However, not all of these homes are rentals. The majority, approximately sixty-eight million (82.93%), are owner-occupied, meaning the person who owns the home also lives in it. This leaves us with around fourteen million single-family homes available for rent.

Understanding Investor Categories

To get a more accurate understanding of the investor landscape, we can categorize investors into four distinct groups:

1. Mom & Pop Investors: These individuals own between 1-9 single-family rental homes (SFRs).

2. Regional Investors: This category includes investors who own between 10-99 SFRs.

3. Smaller National Investors: Those owning between 100-999 SFRs.

4. Institutional Investors: These are the largest players, owning over 1,000 SFRs.

Ownership Breakdown

Now, let's examine the ownership breakdown among these investor categories:

• Mom & Pop Investors: This group constitutes a significant portion of rental property owners. They are individuals like your friends and neighbors who own between 1-9 SFRs.

• Regional Investors: Investors with holdings ranging from 10-99 SFRs. This category represents another substantial share of the rental market.

• Smaller National Investors: Owning between 100-999 SFRs, this group makes up a smaller but still significant part of the rental property landscape.

• Institutional Investors: Contrary to popular belief, institutional investors owning over 1,000 SFRs are actually the smallest segment of the market, as indicated in the chart below:

The Reality of the Market

As the chart illustrates, the largest share of single-family rental homes is owned by mom & pop investors, regional investors, and smaller national investors. The common narrative suggesting that institutional investors, including Wall Street giants, are gobbling up all available homes doesn't align with the data.

In reality, many everyday individuals like you are embracing homeownership as an investment opportunity. Some have seized the chance to purchase a second home, using it as a rental property to generate additional income. Others have decided to retain their first homes as they move up the property ladder.

Bottom Line

While institutional investors do play a role in the single-family rental market, they do not dominate the landscape as widely portrayed in the media. The numbers reveal that the majority of rental homes are owned by individuals or smaller investment groups.

So, if you're concerned about the influence of institutional investors on the housing market, take comfort in knowing that they represent just a fraction of the market. If you have more questions or seek a deeper understanding of the current real estate landscape, don't hesitate to connect with a trusted real estate expert. They can provide the context and insights you need to make informed decisions in today's housing market.