Rise of Investor-Owned Homes Impacting California Real Estate

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An aerial perspective of California's housing market showcasing the growing trend of investor-owned homes.

News Summary

California’s real estate market is seeing a worrying trend as approximately 19% of homes are owned by investors, with specific regions like Sierra County seeing rates as high as 83%. Major urban centers show lower percentages, yet the state’s overall housing crisis persists, driven by skyrocketing prices and a national housing shortage. With a significant increase in the number of investor-owned properties, experts highlight how this trend complicates affordability for traditional homebuyers amidst rising costs.

California has seen a significant trend in real estate as new data reveals that approximately 19% of its homes are owned by investors. This trend is particularly pronounced in certain mountain regions, where the rate of investor ownership soars to 83% in Sierra County alone. In contrast, Ventura County, located on the coast, shows the lowest percentage of investor-owned homes at just 14%.

Research conducted by BatchData and reported by various analysts indicates an alarming rise in the share of homes owned by investors across California. Notably, seven counties—Sierra, Trinity, Mono, Alpine, Plumas, Modoc, and Calaveras—report over 50% of their residential properties being investor-owned. Major urban centers such as Los Angeles, San Francisco, San Diego, and Orange possess lower rates, varying from 15% to 16% for investor ownership.

Despite representing a smaller percentage compared to many other states, where the national average for investor-owned homes hovers around 20%, California ranks 36th among all states in this regard. However, the state grapples with a profound housing crisis, as home prices have spiked by 50% over the past six years, contributing to its status as having some of the highest housing costs in the nation.

The US Chamber of Commerce has reported a national shortage of about 4.5 million homes, exacerbating the existing housing challenges in California. In the first quarter of 2025, investor-owned homes represented 26.8% of all residential property sales across the country, the highest level observed in five years. This surge is largely attributed to soaring homeownership costs that increasingly pose barriers for traditional homebuyers, simultaneously pushing more properties into the hands of investors.

A notable shift in mortgage rates, which doubled in 2022, has also contributed to a decline in homebuyer activity. As a result, this decrease in competition has allowed investors to capture a larger slice of the housing market. While investors can provide crucial liquidity in tight housing markets, their influence may drive prices higher, undermining efforts to enhance affordability.

Experts argue that even though investors support the housing market by injecting billions of dollars, their activities do not necessarily alleviate affordability issues. In fact, many states with significant tourist traffic, such as Hawaii and Alaska, report higher percentages of investor-owned homes at 40% and 35%, respectively, while more affordable regions like Arkansas and West Virginia stand at 30%.

When looking at investor ownership by volume, California holds the second-highest number of such properties in the nation, with around 1.45 million investor-owned homes. Texas leads this ranking with 1.66 million, followed closely by Florida with about 1.21 million homes owned by investors. A staggering 85% of these investor-owned homes belong to individuals or entities holding from one to five properties. Interestingly, 5% own between six and ten, suggesting that a substantial portion—90%%—is controlled by small investors.

Since 2020, the number of investor-owned homes in California has increased by 143,747. However, the overall returns on investment properties have not been compelling; price appreciation ranks California 41st in the nation. These factors paint a complex picture of the real estate scenario in California, where high costs and investor interest intertwine, significantly impacting the housing landscape.