Investors are fracturing the traditional leap from renting to homeownership, leaving aspiring buyers squeezed out of the market.
- Investors are buying more than selling, affecting rental prices and housing choice rather than reducing overall homeownership rates.
- Spiking rents (up 30% in 5 years) consume 39% of renter budgets, stalling the transition to first-time homeownership.
- Small-scale investors are driving this trend by holding properties longer and passing costs directly to tenants.
Real estate investment is a popular topic of discussion topic across the U.S. But the tone of the conversation has shifted from a strategy for wealth building to a critique of its contribution to home prices increasing 135% over the last 15 years and locking buyers out.
Cotality data provides a new perspective on that conversation. Our data shows that investors are fracturing the transition from renter to homeowner by resetting the threshold for rental prices which is contributing to the generational affordability gap.
Priced into place
Investors aren’t squeezing homeowners out of the market. About two-thirds of Americans are homeowners, a rate that has remained basically unchanged since 2021 when investors began their buying spree. However, investors are making it harder for renters to keep up and become first-time homebuyers.
Rental costs consume 39% of the average American’s budget — that’s 8 percentage points more than homeowners contribute to housing costs. There is little margin for error. That hasn’t stopped rents from increasing 30% over the past five years, according to Cotality data.
“Investors can now push pricing buttons in the rental market,” said Thom Malone, a principal economist at Cotality. “This pressure is further disconnecting the rental and housing markets.”
The transition from renter to homeowner is strained. This leaves an opening for investors — particularly mom-and-pop ones — to step in. And they are. Cotality data found that last year, investors bought 20% more homes than they sold.
A window of opportunity
The U.S. housing market is offering an appealing proposition for investors. Single-family home prices are steady, and Cotality’s HPI forecast signals a sales price recovery beginning this year (2026). The current window of opportunity to buy low and sell high is an appealing proposition for investors looking to build a rental portfolio positioned to return a future payday.
This window of opportunity is short-lived, but that suits investors the majority of whom hold properties for about 6 years. This keeps homes available to change hands. Most of the time, they rotate back off the market into investor portfolios.
How long does each investor type hold property
Data source: Cotality, 2026
Non-investors sold 6% more homes than they bought last year, underscoring how although active inventory is on the rise, price proves to be a persistent sticking point for individual buyers. In California, that trend is even more stark. Buying a home in the Golden State can be prohibitively pricey — even with a mortgage. When first-time homebuyers use their savings to compete against cash-flush investors, they are easily outbid even as active inventory is rising in major California markets and prices soften.
In the Greater Area of Los Angeles, large-scale investors rotate quickly through inventory, buying 50% - 60% more properties than they sold. Non-investors sold 6% more than they bought.
Where are investors buying more than they sell?
Data source: Cotality, 2026
But it’s not institutional investors that are driving this trend. While institutional landlords—firms with 1,000 homes or more—draw the most spotlight, they own only 1% to 3% of all single-family rentals. In fact, in six of the top 10 metros, they sold more homes than they bought.
Investor puchase-to-sale ratios
Data source: Cotality, 2026
Smaller investors have carved out a stronger foothold in that category. Small mom-and-pop investors who have under 10 properties purchased 20% more homes than they offloaded last year, and they’re holding them for longer. Cotality data shows that small investors hold property about as long as owner-occupants, with about 40% of them keeping their properties for a decade or longer. That means that they can influence rental prices for longer periods.
“Price matters more to small time landlords,” said Malone. “So, systemic hurdles such as interest rates and rising home insurance costs are passed along to renters in the form of monthly payments. This premium widens the gap further for aspiring homeowners and rarely closes. Even when costs stabilize, the savings then aren’t passed back to the renter.”
The chicken or the egg
The narrative that investors are the sole architects of the housing affordability crisis is incomplete. Their activity undoubtedly tightens an already constrained market, but they’re largely responding to the surging demand for rentals — demand created when soaring prices and volatile interest rates push homeownership out of reach.
Some renters will remain trapped by rising costs. Others will find workarounds, adapting to the financial realities by embracing non-traditional living arrangements or sacrificing location for affordability. In either case, navigating this environment requires clarity. For policymakers and buyers alike, using accurate property and investor data to see exactly who is buying what is essential to understanding the actual dynamics of the market.
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