Basic economics tells you that if you lower the demand for a product, the price should fall.
Limiting financial incentives for housing investors could increase the share of homes owned by the folks who live there.
Consider a new study from the American Enterprise Institute. It notes that favorable financing available to small-scale house investors nationwide may provide 10% more buying power than traditional mortgages offered to the general public.
The study asks “whether federal mortgage finance policy should subsidize small-scale investors competing for the same starter homes sought by first-time buyers, particularly when government-backed credit lowers investors’ cost of capital and strengthens their ability to outbid first-time borrowers for starter-home stock.”
Yes, it’s not Wall Street giants gobbling up a wannabe homeowner’s shot at the American dream. Investors of all sizes create competition for California house hunters, particularly in the state’s more affordable communities.
That’s what my trusty spreadsheet found after reviewing a BatchData report from the third quarter of 2025 that calculates investor ownership of houses and townhomes nationwide.
Investors in this study include everything from giant companies controlling thousands of houses to folks with a small collection of rentals to short-term rental operators to people with a second home. Condo ownership was not included.
By this math, investors of all sizes own 1.28 million houses statewide – 17% of California’s supply. But consider when California’s 58 counties were ranked by the average prices investors paid for homes in 2020-25 – then split into three groups, each equally weighted by the number of houses.
Bargain hunters
Investors are more likely to be a force in the rare, less expensive California counties where budget-strapped homebuyers have a better chance of finding a place of their own.
Note the huge cost differences. The average investor’s purchase price in these cheapest counties was $455,000 – roughly one-third the $1.38 million spent in the costliest counties.
Next, look at California investment preferences in the state’s lower-cost locales compared with its costliest areas.
Investors owned 498,888 houses in the least-expensive counties as of 2025’s third quarter vs. 383,277 owned in the most expensive counties. That’s 30% more.
This translates to California investors controlling 21% of all houses in the least expensive counties, compared with 13% in the most expensive counties.
Additionally, think about investor purchases.
In 2020-25, investors bought 185,779 houses in California’s low-cost counties versus 133,023 purchases in the most-expensive counties. That’s 40% more.
What’s at stake
Now, investors aren’t bad people – whether they’re a Wall Street giant or, far more likely, a mom and pop owner. They’re lawfully taking advantage of a financial system that often puts the odds in their favor against a typical house hunter.
Discounted financing isn’t the only lure offered to investors. Other housing investment incentives include tax breaks, such as accelerated depreciation for investment property or the write-off of many rental home operating expenses.
It’s a government initiative designed to provide rental housing to individuals who do not want to, or cannot qualify to be, homeowners. Or these homes are rented out as alternatives to traditional hotels.
However, if society seeks to increase homeownership, reducing investors’ influence by cutting incentives could be one way to support that widely stated American dream economic goal.
Investor clout is growing. Think about data from Attom, looking at institutions that acquire 10 or more houses a year. These buyers accounted for an average 7.5% off all U.S. home sales in 2021-25. That share was just 4.7% the previous five years.
Much has been made of the handful of large institutions that own a small share of the housing supply. Debate swirls around whether these financial behemoths should be banned.
It’s a misguided policy because it’s too narrow a target. By BatchData math, investor titans – with 1,000 or more houses nationwide – own roughly 2% of all U.S. single-family residences.
Who’s buying where
House investors’ clout varies across the state.
BatchData figures show California’s No. 1 investor spot, by the number of houses owned, is Los Angeles County, where investors controlled 179,294 homes as of the 2025 third quarter.
Next were San Bernardino at 123,088, Riverside at 103,183, San Diego at 79,127 and Orange at 74,663. It’s a decidedly southern group.
However, when contemplating the share of houses not occupied by their owners, investors dominate some of California’s most lightly populated counties.
Using this calculation, No. 1 is Sierra County, where 72% of houses are investor-owned. Mono is No. 2 at 64%, then Plumas at 57%, Modoc at 51% and Alpine at 50%. Most of these investments are likely vacation homes in these hidden spots.
Conversely, investors are harder to find around heavily populated job hubs: San Mateo County has just 11% of homes investor-owned, followed by Marin and Ventura counties at 12%, and Los Angeles and Alameda counties at 13%.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com.
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