Investor home purchases fell 6 percent year-over-year in the first quarter to their lowest level since 2020, when the start of the pandemic ground homebuying to a halt, according to a report from Redfin. Prior to 2020, the last time investors bought so few homes was in 2016.
Investor home purchases fell in the first quarter largely because elevated housing costs squeezed potential returns. While mortgage rates were slightly lower in the first quarter than recent peaks, dipping into the low-6 percent range from near 7 percent throughout 2025, they’re still double pandemic-era lows. Home-sale prices are still rising in most of the country, too. That makes it more expensive for investors to buy properties, and reduces the profitability of rental properties and flips.
There are a few other notable reasons investor home purchases are declining:
• A cooler housing market. Home-price growth has slowed in much of the country, and in some markets prices are falling. That gives investors less confidence that homes will quickly rise in value. At the same time, rising insurance premiums, property taxes and maintenance costs are cutting into margins, particularly for smaller investors.
• Investor gains are losing steam. The median capital gain for a home sold by an investor was $196,618 in the first quarter, up 5.3 percent year-over-year. But that pales in comparison to the double-digit gains common in 2020 and 2021.
• Economic uncertainty has added another layer of caution. Concerns about the Iran war, inflation, a potential economic slowdown and volatility in financial markets may be causing investors to pull back and preserve cash rather than expand their real estate portfolios. Some investors are also waiting on the sidelines because there are more homes for sale than buyers and less urgency to buy immediately.
• Investor activity is normalizing after the pandemic homebuying frenzy. Investors purchased homes at record levels in 2021 and 2022, when ultra-low mortgage rates and soaring home values made residential real estate especially attractive.
“Higher mortgage rates, slowing price growth and rising construction costs are giving both investors and individual homebuyers pause,” Tamara Mattox-Kabat, a Redfin Premier agent in Denver, said in a release. “Flippers and investors are scaling back and being much more strategic when they do buy homes. They’re buying less expensive materials and being more careful about timing their projects to list during the stronger spring and summer seasons. It’s also noteworthy that large institutional investors are focusing more on building new homes than buying existing ones.”
The U.S. House of Representatives recently passed a housing affordability bill focused partly on preventing institutional investors from buying single-family homes — but allowing them to build more homes. While legislation to combat the housing affordability crisis should be a priority, Redfin economists note that banning investors may not have the desired effect.
Real estate investors purchased 19 percent of homes that sold in the first quarter, down slightly from 20 percent a year earlier. Investors bought fewer homes in the first quarter, and so did individual homebuyers; overall pending home sales fell roughly 3 percent year-over-year in March.
Investors held 7.8 percent of all home listings in the first quarter, the smallest share in five years. When investors buy fewer homes, they have fewer homes to sell.
Real estate investor purchases of condos fell 8 percent year-over-year in the first quarter to the lowest first-quarter level since 2015. Condos have become less attractive to investors as demand declines due largely to rising HOA fees and insurance costs.
Investor purchases of single-family homes fell 6 percent year-over-year, and purchases of townhouses fell 13 percent.
Even though investors purchased fewer single-family homes than a year ago, they’re still by far the most popular property type: Single-family homes made up 70 percent of all investor purchases in the first quarter, while condos made up 18 percent and townhouses made up 7 percent.
Investor purchases of low-priced homes fell 10 percent year-over-year to their lowest first-quarter level in a decade.
They fell across the other price points, too, but to a smaller extent. Investor purchase of mid-priced homes declined 6 percent year-over-year, and those of high-priced homes fell 1 percent.
In Detroit, investor purchases fell 35 percent year-over-year in the first quarter — the biggest decline among the metros in this analysis.
The next biggest decline was in Orlando, where investor purchases fell 25 percent year-over-year. Investors have been retreating from Florida for years because the Sunshine State’s housing market has been suffering from dropping prices, high inventory, surging HOA fees and rising insurance costs. Cleveland (-21 percent) comes in third.
On the flip side, investor purchases rose most in the Bay Area and Virginia Beach. Investors bought 19 percent more homes in San Francisco than a year earlier, followed by Virginia Beach, Va. (15 percent) and San Jose, Calif. (12 percent). Investors are trying to cash in on the Bay Area’s hot housing market, which is fueled by the AI boom.