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With mortgage rates still hovering near multi-decade highs and home prices continuing their upward climb, everyday buyers are stepping back from the housing market.
But another group is stepping up: small investors, who are seizing the opportunity to scoop up discounted inventory while larger institutional players and typical homeowners wait on the sidelines.
In the first half of 2025, investors accounted for about 30% of single-family home purchases — both new construction and existing properties — the highest level recorded since property data firm Cotality began tracking the market 14 years ago.
But this surge isn’t being led by Wall Street titans. Smaller players are now leading the charge.
“It’s not just the Blackstones of the world anymore,” Rajan Bhatt, president of Strand Capital, a private-equity firm that has bought roughly 100 homes across cities like Chattanooga, Tennessee, and Indianapolis, told the Wall Street Journal.
While firms like Blackstone and Starwood Capital once dominated the investor landscape, Cotality’s data shows small investors — those with fewer than 100 homes — now make up around 25% of purchases. Large investors account for just 5% on average.
That shift is partly a reflection of who’s still active.
Traditional homebuyers have largely paused activity, stymied by high costs. Large institutional buyers, too, are retreating, squeezed by borrowing expenses and tighter scrutiny from regulators concerned about affordability and access.
“We’re acquiring at a fraction of what we were several years ago,” Chris Avallone, chief financial officer of Amherst, which owns about 46,000 homes, told the Journal.
Meanwhile, smaller investors are finding opportunities where others see risk.
They’re negotiating price cuts and closing quickly, often in cash, making them attractive buyers in a sluggish market.
Builders, facing a backlog of unsold inventory in markets like Texas and Florida, are sweetening the deal.
In July, 38% of homebuilders said they had lowered prices — the highest percentage since 2022 — according to the National Association of Home Builders.
Strand Capital, for example, targets homes around $250,000. The firm typically puts down $75,000, invests another $15,000 in light renovations, and then rents out the home for $2,000 to $2,200 a month. The expectation is the property appreciates by 5% annually, allowing for a profitable sale in three years.
Without pressure from institutional backers or pension funds, smaller buyers say they can take on risks that big firms can’t stomach.
“Some are dipping their toes in the water. Some are starting to put their whole foot in,” Bruce McNeilage, a longtime investor in Southeastern markets like Tennessee, Georgia and South Carolina, told the Journal.
The buyer pool is also diversifying.
Casey Sherman, a senior director at JLL in Charlotte, North Carolina, said he’s helped about a dozen clients break into the single-family investment market over the past 18 months. Some are multifamily investors; others previously focused on industrial or office buildings.
“New companies are getting into the market,” said McNeilage, “it seems like every week.”
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