Overpaying investors nudging out buyers in tight markets 

While buyer affordability woes and economic concerns are fueling the housing market slump, the presence of real estate investors in local markets appears to be growing.

In some competitive markets, investors are paying up to 35% above the median sales price for single-family homes, according to a new report from Realtor.com. Investors are also scoring deals in other regions, paying up to 53% less than the local median purchase price in some areas.

While overall home sales declined 4.2% in the second quarter of 2025 compared to a year earlier, the study found that investor purchases fell by only 2.7%, meaning they retained a larger presence despite the smaller market.

Investor market share is up: That shift pushed the investor market share to 10.8% of all buyers, up from 10.7% a year ago — and less than 2% below the 12.1% peak hit in 2022, the report noted.

When comparing the top 50 U.S. metros in the second quarter, Memphis, Tennessee, had the highest share of investors at 25.2% of all buyers — a 4.7% year-over-year uptick. St. Louis followed with investors accounting for 20.6% of all buyers, and Kansas City, Missouri, was third at 19.3%.

"Even as investors pull back from pandemic-era activity, they're facing fewer headwinds than many typical buyers," said Danielle Hale, chief economist at Realtor.com. "With affordability still stretched and inventory tight, many would-be buyers remain sidelined, giving investors a larger share of the market and, in some areas, more influence over prices."

Investor activity can thus "amplify price pressures," Hale added, "especially in markets where their purchases concentrate in already competitive price ranges."

Investors overpay in some regions, underpay in others: It's typically the Western and coastal states where investors are paying more than typical buyers, the report found. Montana topped the list, with investors paying 35.1% more than the median overall purchase price. Other states high on the list were Utah (where investors paid 33.7% more), California (23.3% more) and New York (12.3% more).

There are also states in which investors pay far below the median home purchase price. The biggest discounts were in Michigan (where investors paid 53.1% less), Maryland (45.4% less) and Virginia (45% less).

But other variables have bigger price impacts: While investors are gaining market share, this is not the primary factor keeping prices elevated nationwide, according to Hannah Jones, a senior economic research analyst at Realtor.com.

"Mortgage rates and housing supply will have a far greater impact on the overall price trajectory than investors alone," Jones wrote in an email to Real Estate News.

And if mortgage rates ease in the spring of 2026, the investor market share is expected to decline, Jones added. "It would take a more substantial drop in rates or stronger rental returns to stir up more significant investor activity."