Is This Why First-Time Home Buyers Can't Find a Home?

In the second quarter of 2025, real estate investors accounted for a record 33% of all U.S. single-family home purchases, marking a significant shift in the housing market landscape.

 

This surge coincides with a housing affordability crisis that has sidelined many traditional buyers, particularly first-time homebuyers.

 

BatchData's Q2 2025 Investor Pulse™ Report reveals that small-scale investors, often referred to as "mom-and-pop" landlords, are the primary drivers of this trend.

 

These individuals, owning between one and five properties, now hold 87% of investor-owned homes.

 

In contrast, large institutional investors, those with portfolios exceeding 1,000 properties, have been net sellers for six consecutive quarters, currently controlling just 2% of investor-owned homes.

 

The data indicates that these smaller investors are stepping in to provide market liquidity as mortgage rates averaging 6.7% have effectively doubled monthly payments, pricing out many middle-income households.

 

This shift challenges the common narrative that large institutions are dominating the market.

 

Instead, it's the entrepreneurial investors who are filling the gap left by traditional buyers.

 

Despite concerns that investors are outcompeting families, the report highlights that 60% of investor sales in Q2 2025 were to traditional homebuyers, effectively returning inventory to owner-occupied status.

 

Even mega-investors sold approximately 40% of their properties directly to families.

 

Geographically, investor ownership varies, with states like Maine and Montana seeing investor ownership rates as high as 31%, while Minnesota reports just 9%.

 

Tourist destinations such as Hawaii and Alaska also report high investor ownership at 26% and 27%, respectively.

 

In Arizona, particularly the Phoenix metropolitan area, institutional investors have significantly reduced their presence.

 

In the first quarter of 2025, such investors purchased only 6.9% of homes sold in Arizona, an 11% year-over-year decline.

 

In Phoenix, the figure dropped to 7.5% from 8.2% the previous year.

 

This trend reflects a broader national slowdown in real estate activity, with total institutional purchases nationwide reaching their lowest level since 2020.

 

First-time homebuyer participation has collapsed to just 24% in Q2 2025, the lowest level on record and an eight-percentage-point drop from 2023.

 

Nearly 60% of U.S. households cannot afford a $300,000 home under current conditions, with six-figure incomes now required in over half of all markets.

 

This stark reality underscores the challenges facing first-time buyers in today's market.

 

As small investors continue to play a pivotal role in the housing market, the path to homeownership for many remains fraught with obstacles.

 

Understanding these dynamics is crucial for policymakers and stakeholders aiming to address the ongoing affordability crisis.

 

 

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