Is it true that big investors on Wall Street bought 44% of homes this year? Definitely not, and it’s not even close. With housing inventory at record lows, many are casting blame on institutional investors like Invitation Homes or BlackRock, but are they really the ones responsible?
Last week, a Medium article claimed the 44% figure and this quickly spread like wildfire on social media. Democratic lawmakers have even introduced bills in response, aiming to impose limits on hedge fund activity related to single-family homes.
2023 has seen a number of wacky housing myths (remember the Airbnb crash anyone?), but this one might just take the cake as the silliest one yet. The data easily debunks the claim. Let’s take a look and see for ourselves.
According to the first chart, sourced from Freddie Mac, large institutional buyers make up only a tiny fraction of the market. In fact, even when you combine their share with that of iBuyers, their total remains a minuscule percentage of homebuyers in the U.S. Institutional homebuyers – those who purchased 100+ homes in a year – didn’t even breach 2.5% market share during the period covered by the data, which goes back to the beginning of the century. As seen in the images below, the overall market share of investors has grown since 2000 but the vast majority are smaller, individual investors.
The chart from John Burns Real Estate provides a similar view. It’s clear that the purchasing activity of big investors – those with 1,000 or more properties – is minimal. Once again, we see that the bulk of homebuying over the years has been by smaller investors buying 1-9 properties.
For another clear picture, the 1,000-plus block buyers made up just 0.4% of market share in Q2, far from the 44% mentioned in the viral story.
So, to sum it all up, there’s no data supporting the claim that Wall Street has been dominating the home buying market since 2000. If blame needs to be assigned, it may be worth pointing out that Millennials were leading homebuyers until mortgage rates rose in 2022. Since then, Gen Xers and Baby Boomers have taken over as top buyers, according to the National Association of Realtors. Either way, one thing is clear: it’s not Wall Street, but that’s not as sensational of a storyline in the ongoing class warfare dialogue.
