It is generally believed that investors who buy houses on the cheap and fix them up eventually sell them, thereby increasing the pool of houses that conventional purchases can buy. But new research blows a hole in that theory.
According to a study from BatchData, a real estate data platform, investors “routinely transact” with other investors. The Phoenix-based company found that just over 53% of investor sales were to other investors in the second quarter. That’s slightly less than the 55% sold to other investors in the prior two quarters, but a bit higher than the 52% average for all of 2024.
The largest investors tend to participate in the investor-to-investor deals, or, as BatchData calls it, “a more closed ecosystem.” About 47% of the homes they purchased in the second quarter came from other investors, and some 66% of the properties they sold were bought by other investors.
Overall, investors sold more than 104,000 houses in the quarter, but just 45% of those sales were to traditional home buyers who plan to occupy rather then rent their places.
“In addition to the important role investors continue to play providing necessary liquidity to a weak home sales market,” said BatchData Co-Founder Ivo Draginov. “They're also bringing much-needed inventory – both rental properties, and homes for owner-occupants – to the market.”
Just not as many as once thought.
The report also dismembers the popular belief that well capitalized Wall Street outfits dominate the investor market. On the contrary, it says, the largest investors – those owning 1,000 or more properties – account for just 2% of all investor-owned houses.
Moreover, the big guys appear to be pruning their inventory rather than adding to it. The second quarter was the sixth consecutive quarter in which the largest investors sold more properties than they bought, 5801 versus 4,069.
Mom and pop investors, on the other hand, “dominate” investor activity. Those who own between one and five properties hold 87% of the single-family homes owned by investors while those owning six to 10 properties hold 4%, for a total of 91%.
Overall, investors of all ilk continue to own roughly 20% of the country’s 86 million single-family residential homes. And they are adding to their holdings.
Investors, the report said, purchased 33% of all single-family houses that were sold in the second quarter, the highest percentage of investor purchases in the last five years. That’s up from 25.7% in the first quarter and 25.7% in all of 2024.
"At the same time, the actual number of homes purchased was 16,000 fewer than a year ago," BatchData’s Draginov said. “The relatively high percentage of home purchases by investors is at least partly due to overall home sales being weaker.”
As always, investors both small and large continued their focus on lower-priced properties, They paid an average of $455,481 per house in the quarter, well below the $512,800 average market price and $410,800 median.
Still, that’s the highest average price in the previous six quarters. And it’s the highest average selling price since BatchData began collecting data. Large investors operate in an even lower price tier, averaging $279,889 for purchases and $334,787 when selling.
The states with the largest number of investor-owned houses are Texas with 1.46 million, California with 1.33 million and Florida with 1.1 million.
