California Sees Rising Investor-Owned Homes Amid Housing Shortage

Categories: California Business NewsCalifornia News

California's housing market shows a significant presence of investor-owned homes, particularly in mountain areas.

News Summary

California’s housing landscape is increasingly characterized by investor ownership, with 19% of residential properties owned by investors. This trend is especially pronounced in mountain regions like Sierra County, where ownership rates can reach 83%. Despite this, California’s investor ownership rate remains below the national average. The surge in investor purchases is fueled by an acute housing shortage, making it challenging for traditional homebuyers as prices soar. Investors hold a significant role in the real estate market, but their presence raises concerns about affordability and market stability.

California is experiencing a significant presence of investor-owned homes, with recent data showing that 19% of residential properties in the state are owned by investors. This trend is particularly pronounced in certain mountain regions, where the rate of investor ownership can soar to as high as 83% in locations like Sierra County.

While coastal areas such as Ventura County report the lowest investor ownership at 14%, a total of seven counties in California have more than 50% of their homes owned by investors. These counties include Sierra, Trinity, Mono, Alpine, Plumas, Modoc, and Calaveras. In contrast, major urban counties such as Los Angeles, San Francisco, San Diego, and Orange reflect lower rates of investor-owned homes, with ownership rates ranging from 15% to 16%.

Despite California’s investor ownership rate being below the national average of 20%, the state ranks 36th among all states for investor-owned homes. The overall investor-owned homes in California total approximately 1.45 million, making it the second highest in the country after Texas, which has 1.66 million investor-owned properties, followed by Florida with about 1.21 million.

The rise in investor homeownership comes amidst an acute housing shortage in California, where home prices have escalated by 50% over the past six years, ranking the state as one of the most expensive places to buy a home. This shortage is part of a nationwide trend, with the US Chamber of Commerce estimating that the country is facing a shortage of approximately 4.5 million homes.

The trend of rising homeownership costs is creating barriers for traditional homebuyers, increasing the share of investor purchases. Doubling mortgage rates in 2022 have further dampened the ability of prospective buyers to enter the housing market, allowing investors to capture a larger market share. In the first quarter of 2025, homes owned by investors represented 26.8% of all national residential property sales, marking the highest percentage in five years.

Investors play a crucial role in providing liquidity to the housing market, injecting billions into real estate. However, this influx of capital may lead to increased home prices instead of promoting affordability. Data indicates that a significant 85% of investor-owned homes in California are held by individuals or entities with one to five properties, while roughly 5% own between six to ten properties. This shows that the vast majority of investor-owned homes in the state are controlled by small investors.

Looking at the broader picture, states like Hawaii and Alaska have even higher percentages of investor-owned homes at 40% and 35% respectively. In contrast, more affordable states such as Arkansas and West Virginia report 30% of homes being investor-owned.
The investor market in California continues to grow despite the overall returns being viewed as low, with property price appreciation ranked 41st nationwide.

In summary, California’s housing landscape is characterized by a considerable percentage of homes owned by investors, particularly in mountain regions. This trend is occurring amidst a backdrop of housing shortages and escalating prices, posing challenges for traditional homebuyers while reflecting the changing dynamics of the real estate market.