In an increasingly uncertain environment, investors are growing skittish about adding to their portfolio, with their purchases of residential properties falling 6% in 2Q 2025. That marks a five-year low of 52,000 homes.
By property type, investors' purchases of single-family homes slipped by 4% and 2% when it comes to multi-family, according to a new report from Redfin.
Redfin defined an investor as “any institution or business that purchases residential real estate, meaning this report covers both institutional and mom-and-pop investors.” Its analysis is based on county-level house purchase data from 39 of the most populous U.S. metros.
There are several reasons for the declining market. Even though most investors pay in cash, many still rely on loans to pay for renovations. Home prices are near record highs and interest rates have climbed. On top of that, rents are falling in some parts of the country and tighter regulations are making short-term rentals less attractive.
Profits have taken a dive too. “The typical investor earned $195,934 in capital gains via selling a home in the second quarter, up 1.7% year over year. For comparison, at the start of 2021, investor capital gains were up more than 30% year over year as investors snapped up properties and quickly sold them,” Redfin reported.
Worse yet, the share of homes investors sold at a loss rose slightly in the second quarter. Almost 7% of homes investors traded in the second quarter were sold at a loss, compared to 5% a year earlier.
Condos were the segment most affected by the downward trend. Investor purchases fell 13% year-over-year -- at least triple the decline for any other property type.
Condo sales have been hit by high homeowners’ association fees, special assessments for maintenance, difficulty finding affordable insurance, fear of lawsuits, rising prices and high mortgage rates. Added to this, the risk of slowing rent growth and rising vacancies explains why condos are often viewed as risky investments, according to Redfin.
Despite these challenges, investors continue to buy nearly one in five homes sold in the U.S. However, they are being more cautious in their selection. For others, a buyers’ market “in which there are hundreds of thousands more home sellers than buyers, investors–just like regular buyers–have a chance to get a deal,” and grab the opportunity to buy for less or extract concessions, Redfin noted.
While investor purchases of condos are declining, their share of the market has remained essentially unchanged at 16% in 2Q 2025.
Florida markets were especially hard hit by cutbacks in investor purchases in 2Q 2025. The worst decline was in Orlando, where they fell 25%, followed by Jacksonville (16%), West Palm Beach (15%), Tampa (13%) and Miami (12%).
On the West Coast, however, investors were still actively buying, led by Seattle (up 51%), San Francisco (24%) and Portland, OR (14%).
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