The Landlord Lens - Realtor.com Just Exposed the Truth About the 2025 Housing Market

Episode Date: July 5, 2025

Is the 2025 housing market really frozen? Not for investors. Realtor.com’s latest data shows they’re still buying often in surprising places. In this episode, we break down the new report and explain what it means for landlords and rental property investors in 2025. #housingmarket2025 If you’re looking to buy your first rental or grow your portfolio, this episode will help you think strategically about 2025’s changing conditions.Read the full Realtor.com investor trends report here: https://www.realtor.com/research/investor-home-purchases-2024/

Our friends over at Realture.com published a bunch of data. Small real estate investors have been more active, at least as a percentage of total buyers in the market. So even in this slower market, investors, especially those that had capital deployed before 2020, still have options and they're exercising them. Hey, everybody. Welcome back to another episode of Landlord Lens, where I'm joined as usual by our CEO, Shamis Nally. Howdy Seamus? John, how's it going? Pretty good.

Pretty good. I'm glad we're out of that hot spell. I hear you. I'm really excited to talk about our topic today. Housing market, frozen. Totally frozen. Nobody's buying anything, I heard. Yeah, that's what I thought as well. And then our friends over at Realture.com published a bunch of data. Granted, it is about 2024 because data's really slow to come out around investment, right? Yep. Real estate investment specifically that includes small investors, landlords, right? Yes. But they put out a bunch of data around 2024 that showed the market's not frozen. In fact, the headline was that small real estate investors have been more active, at least as a percentage of total buyers in the market. Yes, exactly, which I think is surprising to a lot of folks that have been watching all the news about folks struggling to buy a house and all these primary folks that are feeling edged out of the market, that, well, that's probably happening. to the mom and pop investors too, and that's just not the case.

Yeah, and even if you just drive around and look at the for sale signs, there was a time where for sale signs did not stay up for more than a couple days, right? You'd see the sign goes in the yard and it immediately says under contract or sold, right? That has not been the case. And so I think even just in my local community, I assume the market was at a stalemate. Yeah. And really interesting to see that the investors are still at it. That's right.

As small real estate investors, we're still doing our thing. Let's talk about what the actual data showed. So, John, can you kind of walk us through what it was? What you see in the housing market in terms of number transactions? Yeah, they've gone down. But the share of activity in the investor side is totally different. So investors bought the same amount of homes in 24 as they did in 23, despite this kind of cooling housing market.

And so while homeowners themselves and folks that are buying primaries in general pulled back, investors as a rate of those transactions actually rose. It stayed basically the same, but it technically rose from 12.7% up to 13%. And this is compelling to see and an interesting, I think, feature of this rate environment that we're in basically the changing capital reality in America today. So even in this slower market, investors, especially those that had capital deployed before 2020, still have options and they're exercising them. Absolutely. And for me, at least because I bought my first investment property back in 2013. Yeah. And I've got to be honest, I didn't think about rates at all at that time, right? Nor did I think about the massive fluctuation

that could occur in interest rates. I think it's super valuable to actually look at that graph and also realize outside of the COVID error, right, where there's been a massive change in rates, inflation and obviously influx in appreciation. We're still at an all-time. We're still at an all-time high. If you basically take that segment out, the market itself is more active than ever before, especially the small real estate investor. So that's really good to see. And it's what we often talk about and what we hear when we're talking to our landlords is real estate's a long-term game, right? Yeah. So the best time to buy is usually yesterday. Yes. And so we're really seeing that in the market. And it doesn't surprise me that it is the small real estate investors that

are after it. What is noticeably missing from this graph, I would say, is actually the Wall Street investors. The big guys. So what's, John, what's going on there? Yeah. So this is one of the, I think, interesting things that I don't think was talked about enough in 2019, 2020 in the onset of COVID and the changing monetary policy. And that was, it basically invited big capital into the housing market on mass, especially as the government passed laws, eviction moratoriums and things are ways to subsidize renters to pay rent. Well, now it just looked like the government

might be able to pay the rent of the renters, and so the risk of that investment seemed way lower, and then obviously at the interest rates that you could buy a rental property or an apartment building or whatever to get that rental income were pretty favorable relative to the bond market. And so big investors, who were looking for good places to put their money,

thought, wow, residential real estate looks real good right now. And they plowed a bunch of money in, which you can see in those two years there. But they're pulling back now as the rates on the bond market have lifted. And it looks like actually there's significantly more risk-free investments to park their low-risk cash. Yeah, absolutely. And while the Wall Street housing still only makes up like 2 to 3 percent, right, the entire market, whether they're shoving money into the market or pulling money out of the market, right? Matters a lot in some communities, right?

In the Sun Belt communities where they were super active, it's actually created a lot of, a lot more opportunities for small real estate investors to look at affordable housing, affordable kind of up-and-coming locations to actually purchase. So that is good. This is a situation where back in 2021, 2020, what was good, for Walls, which was good for us, was also very good for Wall Street. That's flipped just a little bit. Yes. Right now, which is a good opportunity. Yeah, it's a very, very good opportunity, much less buyers going after those delicious cash flowing deals in your area, if there are any. Yeah.

So another piece of this related to the rate changes is that cash buying is dropping. So these I buyers, right, that were really prevalent for a while and Zillow famously made headlines when there's went kapit. they were coming in with all cash to buy these properties in order to avoid the cost of the loan and also ride the appreciation wave that they were anticipating. And, you know, in general, highly capitalized individuals and organizations were doing this in order to get it on the coming appreciation wave from the promised by those lower interest rates. Well, now when you look at the investor total that are buying with cash, in 2022, during this period we're talking about 66% of these investors were going in all. cash. No financing at all. Now it's down to 62%. And to put that in, now, okay, there's not a big swing, John. It's a six percentage point swing. Well, that's the lowest since 2008. Interesting. Right. So, so it, people are now much more comfortable with financing these deals to some extent

because of the competition in the market dropping so significantly as inventories have risen and buyers aren't showing up. And it's funny because I think that, is completely contrary to the conversation around interest rates, right? Yeah. Interest rates are high, you know, now is not a good time to take a loan. Loans are more expensive. So why is the financing then looking more attractive? And I think what's happening is people are putting their money in other investments outside

of real estate. So any cash that they have, they're putting in whether it's public markets, maybe it's crypto, you know, maybe it's like me and they're just buying a lot of beanie babies for the future. And they're doing that instead of, bearing that cash into an investment property. Instead, they'll take the financing now, I think, especially today. Well, this data was all from 2023, 2024. I think today we finally have line of sight to a potential interest rate cut.

Yeah, yeah. So what a great time to get a house under finance today, knowing you can refinance, right, in the future as interest rates come down and squirrel away that cash maybe in a different form of investment that you're confident you're going to get, you know, five to seven percent. on and offset the interest you're actually paying on that financing. But at the same time, investors are also selling. And I think these two things can seem contradictory, but I don't think they are. When you look at the source of the wealth, I think investors are actually using to buy.

Most of it's coming from selling properties. And so, Seamus, you've kind of experienced this yourself a little bit. Why do you think they're doing it? Yeah, well, I can speak to a personal example. So as I mentioned earlier, I've been purchasing rental properties since 2013. And as you can imagine for anyone that was buying out that, and there's been massive appreciation, right, over those last 12 years has been really incredible. And the math that I'm looking at now, it doesn't add up to actually hold on to the property.

It makes a lot more sense to take the cash out of it. So I'll just kind of walk you through it. I've got a property worth $300,000, right? I built $220,000 in equity, which sounds great, right? It's cash flowing about $350 per month today. If I want to do a cash out refinance, which would typically be my strategy is a long-term holder for that, when I take into account that I don't want to go in the red, right? And I take into account the current interest rate environment.

I'm signing up for a 30-year loan, and the most I'm taking out of that property is like $107,000. Right? About half of your equity. About half of my equity, exactly. And so when I think about that, it's like, do I want half of my equity today and sign up for that? Or do I want to pull all my equity out and think about putting it into another property, another project that I think can experience a large degree of appreciation over the next decade? So it's really, for you, it was a tradeoff between do I want more optionality, right, from the cash I can get an access from my portfolio? or do I want to maintain the number of units I have?

And it sounds like that optionality is much more valuable to you in the next deal. Absolutely. In holding a property for the last 12 years, I've also learned a lot. Learned a lot about the area. I've learned about that local rent, right? I just moved to Colorado and didn't know if I would be a long-term Colorado residence when I bought that property in upstate New York. So my life's changed.

My understanding of the market has changed a lot too. And so it's just a really good opportunity for me to pull money out of that, move into a different property type, move into a different location for the rest of my investments. That makes a lot of sense. And if you're watching this and you think, well, I haven't changed at all. First of all, congratulations, that's impressive. But second, another thing has changed, and that's the market. Yes. Right? The places to buy in 2012 that you might have put your money in and put your bet in there might not be the same places you would put, you know, double, triple that cash that you now could access today in the housing market. 100%. There's a lot of places in the country that are much different today than they were 12 years ago.

What's your message, and I know this is a curveball, but what's your message to the landlord that has not had that appreciation swing, maybe the one year or two year landlord? Well, for me, I think that it's a long-term game, right? So I would continue to hold on to it. Appreciation does go in cycles. When you look at historically, there have been a few periods with leaps and bounds of gains like we saw during the COVID period. But realistically, it's a game. gain of, you know, you're getting 2 to 4% every single year, right? Appreciation, which is really great. And so for them, it's set that property on the sideline, right? Just like they say with long-term investing in the public markets, don't touch it, don't look at it, continue to maintain it and let it grow for you. And then look at the rest of your portfolio and maybe there are opportunities there to harvest what you've sowed years ago. So investor activity isn't dead. If you're looking to buy your first rental or expand your portfolio or just reallocate your

capital better, there's opportunity here if you know where to look. Yeah, absolutely. And keep an eye on the housing prices, which are dropping across many markets, right? Rent prices and make sure you're using the most up-to-date data when you're actually looking at bringing a new property into the portfolio so that you're buying it the right time. All right, everybody. Well, have a great rest of your and thanks for tuning in to our analysis of market dynamics. So fun. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord better from anywhere for free at turbotenant.com.