Local Investors Outpace Builders In Affordable Home Output

Local investors have officially surpassed builders in adding new housing supply in many markets, according to a new report from New Western.

In 2025, investors have brought 30,852 renovated single-family homes back to market in New Western coverage areas — far exceeding the 18,973 new builds sold this year.

Kurt Carlton, co-founder and president of New Western, told HousingWire the imbalance is striking.

“There’s a huge need for affordable housing, and the builders can’t supply it, but we have 15 million vacant homes,” he said. “And… whether it was the great resignation or whatever, we’ve had a huge influx of people coming into this space.

“They’re highly educated, corporate refugees that have left high incomes, looking for something more autonomous, and they’re taking those management skills, rehabbing these houses and bringing them back to the market. Some are making income beyond what they were seeing in the corporate sector.”

Small and local — not institutional

Institutional investors accounted for only 1.93% of all home purchases in Q1 2025 and just 6.6% of investor purchases, down 62% from their 2021 peak.

“They’re trading one to five houses a year, not Wall Street institutions,” Carlton said. “These are guys… wearing T-shirts with sawdust on their shoulder. They’re out there in the field.”

Most operate close to home — with 68% investing within 30 miles of where they live. About 78% plan to purchase just one to five properties in the next year.

Policy gaps and incentives

Carlton argued that policymakers don’t yet grasp the role these small investors play.

“We were just in Washington working on trying to make some changes to the (Neighborhood Homes Investment Act),” he said. “Obviously, that didn’t go through, but there’s a lot of upset people in Washington. They could have made some changes to make it more accessible.

“But everybody’s aligned on affordable housing right now. So there’s the will, and maybe we just need some education.”

The Neighborhood Homes Investment Act would create a federal tax credit to build and rehabilitate affordable homes for urban, suburban, rural and tribal communities.

That legislation was introduced in the U.S. House by Rep. Mike Kelly (R-Pennsylvania) in April — drawing widespread bipartisan support before being referred to the Ways and Means Committee.

“There’s really not any incentive for small real estate investors to find these houses,” Carlton said. “They’re doing this all on their own.”

The hidden housing market

More than 70% of revitalized homes are purchased off-market — never showing up in MLS data, according to the report.

Carlton said the omission distorts the picture.

“If you look at the (Federal Reserve Economic Data), it’s not complete,” he said. “There’s a million homes that are not included in those data sets because they’re off-market. All that data comes from NAR, it comes from the MLSs, and it’s all on-market transactions.

“There’s a million that are off-market. These are generally not habitable. It’s the type of house that a local real estate investor really needs to buy and revive.”

Such listings generated roughly $1 billion in real estate commissions across Q1, Carlton said.

“That was all generated from just these investors finding the houses, reviving them and listing them on the MLS, on the second transaction,” he said.

Filling the affordability gap

Revitalized homes typically re-enter the market at significantly lower price points than both existing homes and new construction.

The report found the average existing home sale price was 54% higher than the average revitalized home — and the median existing home price was 17% higher.

Compared to new builds, revitalized homes are often 35% to 80% less expensive.

“It’s really challenging for builders to supply affordable inventory in the areas that need it,” Carlton said. “The new affordable construction in Los Angeles is dismal. They can build workforce type housing, but it’s out in areas where we don’t need it. If you want to fill gaps, you need these local real estate investors who are going to find existing homes that are vacant, and they’re going to return them to market.”

Generational shifts

The face of real estate investing is shifting.

Millennials and Gen Z express the most confidence about housing values, while Baby Boomers remain more pessimistic.

Female investors are completing projects faster and more efficiently than male, according to the report.

Carlton said younger investors are driving innovation.

“The information is just traveling so fast these days and more people than ever are getting exposed to as many strategies as they can handle,” he said. “You can go through eight different strategies in no time on social media or by digging a bit on ChatGPT. Things are changing really quickly.”

New Western’s full report can be found here.