First-Time Home Buyers vs. Investors: David Still Beating Goliath in Some Markets, Says Report
New research from Neighbors Bank reveals that, across 30 metros in 2024, 69% of starter homes were bought by first-time home buyers (FTHBs). Investors snapped up 31%.
However, there were huge variations across different markets. In Miami, for instance, investors bought more than half (57%) of starter homes, leaving just 43% for FTHBs.
Disclosure note: Neighbors Bank (NMLS #491986) is a Columbia, Missouri-based national lender. Equal Housing Opportunity. Neighbors Bank is an affiliate of Three Creeks Media, which operates this website.
Local Laws Can Help or Hinder First-Time Buyers
"Our analysis found that investor dominance is concentrated in markets with fewer limits on short-term rentals or investor ownership," wrote Jake Vehige, Neighbors' president of mortgage lending, last month. "In contrast, metros with stronger affordability protections and owner-occupant policies show a clear advantage for first-time homebuyers."
There is clearly concern in some parts of the country about giving free rein to investors to buy unlimited residential homes. "An upsurge of corporate purchases of single-family homes has sparked legislation in at least half a dozen states this year," said Governing.com earlier this year. "Legislators hope to preserve homeownership as a path to building wealth for middle-class families and limit the number of properties owned by large corporations."
It also cited data that suggests 575,000 single-family rentals across America are owned by large companies.
Bill in Washington State to Limit Investor Purchases Stalls
Those companies that are large investors in homes may have powerful lobbyists.
In Washington state, a Senate bill was introduced at the end of January that "Prohibits an investment entity, or a business entity that has an interest in more than 50 single-family residential properties, from purchasing, acquiring or otherwise obtaining an interest in another single-family residential property, with certain exceptions."
By Mar. 17, that bill was had been set aside and is no longer under consideration. It's possible that other states could pass similar laws, however.
Corporate Investors vs. Vacation Home Buyers
It's worth noting that the data Neighbors scoured cannot differentiate between someone buying a vacation home and a true investor purchasing for the rental income and capital appreciation a residential unit can generate.
That may help explain why so many homes in Miami go to "investors," many of whom may just want a place for their and their family's vacations. However, it could also be that many of those — and others — primarily buy for rental income through Airbnb and other rental agencies catering to vacationers.
Of course, that distinction makes little difference to first-time buyers in Miami and other places where investors regularly snatch starter homes. All they want is a chance to get on the homeownership ladder.
1 in 11 Homes Nationwide Owned by Investors
Last month, the Lincoln Institute of Land Policy published a survey of residential land parcels across 500 counties nationwide. And it found corporations own 8.9% of those, which is roughly 1 in 11.
However, it found large variations in different housing markets. "Corporate ownership exceeds 20 percent in communities including St. Louis, Missouri, Harrisonburg, Virginia, and Franklin County, Ohio, illustrating deeply uneven impacts across the country," it says.
"It's clear that corporate ownership of residential property is here to stay — and might even continue increasing," said George McCarthy, president and CEO of the Lincoln Institute. "However, this report offers a look into key trends, establishing a national baseline that policymakers, reporters, and communities can use to best understand how to move forward."
Investors Provide Rentals, But Young People Still Want to Own
A vacant home in a place where housing is in demand seems a waste. But investors rarely buy property only to leave it empty.
They want to get a tenant in as quickly as possible to start earning rental revenue. So, the home isn't wasted. It's occupied by a tenant instead of a homeowner.
That can be a social good in places where rental homes are in short supply. If enough new ones become available, that mops up excess demand and might even lower market rents.
However, a 2025 survey from Clever Real Estate suggests that homeownership's integral part within the American dream remains intact.
"Roughly 9 out of 10 boomers (90%), Gen Xers (90%), and millennials (89%) all believe owning a home is still part of the American dream, but three-quarters or more of each group (80% of millennials, 77% of Gen X, and 75% of boomers) also say it’s not affordable for the average American," according to the survey.
Restoring smooth paths to homeownership is not beyond the realm of possible. It comes down to building sufficient affordable housing to meet demand in places where people want to live.
