As competition eases, both small investors and average American households could benefit from this shift
July 26, 2024
Image: Shisu_ka / stock.adobe.com
With a lack of all-cash offers from large investors, homebuyers could benefit from less competition.
During the pandemic, cash offers dominated the housing market, but this trend is slowing down. According to real estate marketing platform Realtor.com, 64% of investors used cash to purchase a home in 2024, down from 69.7% in 2021 and at the lowest percentage since 2008. There are many reasons why this is occurring, such as the rise in home costs. However, Realtor.com suggests the main reason for the shift is the decrease in big investors with strong financial backing. From January to March 2024, 62.6% of investor purchases was by small investors with 10 or fewer homes; that’s the highest small-investor share recorded since 2001.
The rise of mom and pop investors is a good thing, according to G. Brian Davis, real estate investor and co-founder of property management software SparkRental.
“It’s better for everyone involved that institutional money is withdrawing from the single-family home space,” he says. “It creates less artificial demand among buyers, therefore reducing some upward pressure on prices. It also leaves room for mom and pop investors to operate.”
