Is Wall Street Buying Up All the Homes in America?

If you're considering the prospect of purchasing a home, staying informed about the latest real estate developments becomes crucial for making well-informed decisions. One topic that often surfaces in real estate discussions is the role of investors and how they influence the housing market. This might lead you to ponder questions such as:

How significant is the number of homes owned by investors?

Are large institutional investors, such as major Wall Street firms, truly acquiring such a substantial number of homes that it becomes challenging for the average person to find one?

To address these queries, let's delve into the actual scenario based on available data.

To begin, let's establish the total number of single-family homes (SFHs) and identify the proportion that serves as rental properties owned by investors. According to insights from SFR Investor, an entity specializing in the analysis of the single-family rental market in the United States, there are a total of eighty-two million single-family homes in the country. However, the crucial question arises: how many of these are utilized as rentals?

Recent data shared in a pertinent post reveals that sixty-eight million (82.93%) of these homes are owner-occupied, signifying that the property owner resides in the home. If we subtract this figure from the overall number of single-family homes (82 million), we are left with approximately fourteen million homes designated as single-family rentals (SFRs).

Now, the next query emerges: do institutional investors exclusively own all of these fourteen million remaining homes? The answer is far from affirmative. To gain a clearer perspective, let's categorize investors into four distinct groups:

Mom & Pop investor: Owns between 1-9 SFRs

Regional investor: Owns between 10-99 SFRs

Smaller national investor: Owns between 100-999 SFRs

Institutional investor: Owns over 1,000 SFRs

These categories demonstrate that investors span a spectrum, with not all falling into the large institutional investor bracket. To illustrate this more vividly, here are the percentages reflecting the distribution of rental homes among each type of investor (refer to the chart below):

As depicted in the chart, contrary to the narrative perpetuated by news outlets and social media, the predominant ownership of single-family homes (SFHs) does not lie with large institutional investors. Instead, the majority is under the ownership of small-scale mom & pop investors, individuals akin to your friends and neighbors.

The reality is that individuals, much like yourself, strongly value homeownership and perceive acquiring a home, whether it be a primary residence or a second property, as a viable investment. Some may have identified opportunities in recent years to purchase additional homes for rental purposes, generating supplementary income. Others may have opted to retain their initial property rather than selling it when upgrading to a new home.

It's essential not to be swayed by sensationalized narratives regarding institutional investors. They do not monopolize the housing market, rendering it unattainable for the average person to make a purchase. The numbers reveal that institutional investors constitute the smallest segment of the pie chart.

In conclusion, while institutional investors play a role in the single-family rental market, they are not responsible for a comprehensive acquisition of available homes. If you encounter uncertainties or have queries regarding the housing market, consider consulting a reliable real estate professional who can provide the necessary context and expertise.