Categories: California Business NewsCalifornia News

California’s Residential Property Market Sees Spike in Investor Ownership

California is seeing a notable rise in investor-owned homes, impacting the housing market.

News Summary

A recent analysis shows that about 19% of homes in California are owned by investors, with mountain regions experiencing rates as high as 83%. Despite lower overall investor ownership compared to some states, California faces a significant housing shortage, compounded by rapid home price increases. Urban areas illustrate less investor ownership, but a notable surge in investor-acquired homes suggests challenges for traditional buyers. This report highlights the complexities in California’s real estate market, where investors play a critical role amidst escalating prices.

California is currently witnessing a significant trend in residential property ownership, with approximately 19% of its homes owned by investors, according to recent data analyzed from BatchData by the Orange County Register. This figure indicates a prominent role for investor entities in the state’s housing market, especially in certain regions.

Particularly striking is the prevalence of investor-owned homes in California’s mountain regions, where the ownership rate reaches as high as 83% in areas like Sierra County. In contrast, Ventura County, located along the coastal area, holds the lowest rate of investor ownership in the state at 14%. Furthermore, a total of seven counties across California report over half of their residential properties being investor-owned, which includes Sierra, Trinity, Mono, Alpine, Plumas, Modoc, and Calaveras.

Major urban areas such as Los Angeles, San Francisco, San Diego, and Orange County exhibit lower levels of investor ownership, ranging from 15% to 16%. This positions California as 36th among all states regarding the share of homes owned by investors, slightly trailing the national average of 20%.

Despite the lower rate of investor ownership compared to other states, California is grappling with a critical housing shortage. Over the last six years, home prices in the state have surged by 50%, making homes among the most expensive in the nation. According to the US Chamber of Commerce, this issue is compounded by an estimated nationwide shortfall of around 4.5 million homes.

During the first quarter of 2025, investor-owned homes constituted 26.8% of all residential property sales in the United States—marking the highest percentage recorded in the past five years. This increase suggests that traditional homebuyers are facing increasingly prohibitive costs of homeownership, which is prompting a rise in investor purchases.

The record high mortgage rates, which doubled in 2022, have further diminished homebuyer activity, subsequently allowing investors to capture a larger share of the housing market. Though investors play a crucial role in providing liquidity in tight markets, their presence may inadvertently contribute to escalating home prices, negating efforts to enhance affordability.

Research indicates that while investment entities inject significant capital into the real estate market—adding billions to local economies—they do not necessarily lead to reduced housing costs. Notably, tourist-heavy states such as Hawaii and Alaska report even higher shares of investor-owned homes at 40% and 35%, respectively, while more affordable states like Arkansas and West Virginia each have 30% of their homes owned by investors.

In terms of individual numbers, California is home to roughly 1.45 million investor-owned residences, making it the state with the second highest total in the country, surpassed only by Texas at 1.66 million. Following California and Texas, Florida emerges as third with approximately 1.21 million investor-owned homes.

Interestingly, research shows that the majority of these investor-owned properties—about 85%—are held by individuals with one to five homes, while around 5% belong to those owning between six to ten properties. This suggests that 90% of California’s investor-owned homes are primarily managed by small-scale investors rather than large investment firms.

Moreover, the trend shows an increase in investor portfolios, with an addition of 143,747 homes since 2020. Although the overall returns on investment properties in California are perceived as low, with price appreciation ranked 41st nationwide, the state continues to be a focal point for investor interest in the housing market.