Real estate investors dominated single-family home purchases in the second quarter of 2025, accounting for one-third of buyers, the highest in five years. Despite lower overall home sales this year, investors filled the gap left by owner-occupant buyers struggling with high mortgage rates.

Small investors, not large institutional firms, own the majority of investor-owned homes. They make up 91% of the total market share. States like Texas, California, and Florida have the highest number of investor-owned homes, while Hawaii, Alaska, Montana, and Maine have the highest share per capita.

Investors are stepping in to purchase homes as high mortgage rates persist. Cash purchases are common, stabilizing the housing market by maintaining liquidity. Real estate investment offers a way to diversify portfolios and potentially generate passive income, but it also comes with risks like property maintenance and market fluctuations.

Mortgage rates have remained high since 2022, affecting the affordability of home purchases. It’s important to assess whether rental income can cover expenses and consider rising insurance rates in climate-change-prone areas. Real estate investing requires careful research, as markets can be cyclical and property values fluctuate.

Housing inventory has increased nationally, but price trends vary across regions. Mortgage rates have stayed above 6% since 2022, impacting purchasing decisions. Consider the potential for positive cash flow from rental income, as well as the costs and risks associated with property ownership.

Investing in real estate can be a hedge against inflation and a source of cash flow, but it also requires time, maintenance, and financial planning. Market conditions, mortgage rates, and insurance costs should be carefully evaluated before making a purchase.

Read more at Yahoo Finance: Investors now make the largest share of homebuyers in 5 years. Is it time for you to invest in real estate?