Has real estate stopped being a good investment?
The number of real‑estate purchase transactions by investors in the United States fell by 6% on an annual basis to its lowest level since 2020, according to Redfin data.
The report indicates that the main reason for buyers pulling out of the single‑family home market and beyond was high housing costs.
“Although mortgage rates in the first quarter were slightly lower than the last peak levels, falling to a level just below 6% from nearly 7% that persisted throughout 2025, they are still twice as high as the lowest pandemic‑era levels,” experts said.
“Real‑estate prices are still rising across most of the country. This makes buying real estate more expensive for investors and reduces rental and flip profitability. Before 2020, investors last bought so few homes in 2016,” they added.
In various U.S. regions where apartment prices fell, investors are losing hope of a quick value rebound.
“At the same time increasing insurance premiums, property taxes, and maintenance costs cut profits, especially for smaller investors,” the report noted.
Data show that the median capital gain from selling real estate by an investor in the U.S. in the first quarter was 196,618 USD.
This represents an increase of 5,3% year‑over‑year, clearly lower than the double‑digit growth seen broadly in 2020–2021.
Investors who do not want to rent out properties must also contend with a strained economic situation caused by the Middle East war.
“Inflation, potential economic slowdown, and market volatility may cause investors to pull back and save cash instead of expanding their real‑estate portfolios,” it was stated.
“Some investors are also staying on the sidelines because there are more homes for sale than buyers, and the urgent need for immediate purchase is lower,” added the report.
Source: Redfin.
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Speculators are fleeing the market. Yet they maintain a position
Redfin experts emphasize that lower investor activity in the real‑estate market is a good news for individual buyers, for whom potential profit is secondary.
First‑time apartment buyers actually have a better chance of a good start when they don’t have to compete with price‑driving forces.
Nevertheless, U.S. investors bought 19% of homes sold in the first quarter, a slight decline compared to the 20% recorded in the same period a year earlier.
“Higher mortgage rates, slowing price growth, and rising construction costs mean both investors and individual home buyers are holding back on decisions,” said Tamara Mattox‑Kabat, Redfin Premier real‑estate agent.
“Speculators and investors are scaling back their activity and are far more strategic when buying homes. They buy cheaper materials and plan project timelines more cautiously to list them in stronger spring and summer seasons. It’s also worth noting that large institutional investors focus more on building new homes than buying existing ones,” she added.
Source: Redfin.
Data show that apartment purchases by investors fell by 8% year‑over‑year, reaching the lowest level in the first quarter since 2015.
“Apartments have become less attractive to investors due to declining demand, mainly caused by rising HOA fees and insurance costs,” the report said.
“Although investors bought fewer single‑family homes than a year ago, they remain the most popular property type. In the first quarter, single‑family homes accounted for 70% of all investor purchases, while condominiums were 18% and townhouses 7%,” added.
Row‑house purchases fell by 13%.
Source: Redfin.
Also read: Market real‑estate slump. Home seekers “should know this” - experts say
See also: Real estate no longer dropping. In the month, 40,000 sales agreements were canceled, apartments linger on the market for 60 days
Source: Redfin.
