Full Breakdown
Investor Influence in the U.S. Housing Market: The Rise of Non-QM Loans
11/27/2025, 1:12:06 PM
Current Market Dynamics
In the first half of 2025, real estate investors accounted for 29% to 32% of U.S. home sales, maintaining a significant presence in the market despite affordability challenges. This investor share has surpassed previous peaks, with 30% recorded in September 2025, compared to 27.2% in February 2022 and 27.1% in January 2024. The trend reflects a shift in the housing market, where first-time homebuyers represented only 20% of sales in 2025. The rise in investor activity is attributed to ongoing affordability issues, which have driven demand for rental properties and increased the prevalence of non-qualifying mortgage (non-QM) loans.
The Role of Non-QM Loans
The surge in non-QM loans, particularly business-purpose investor loans, has become a critical aspect of the housing market. In the third quarter of 2025, non-QM mortgage bond issuance reached a record $20 billion, with September alone contributing approximately $7.5 billion. This growth highlights the market's adaptation to the needs of borrowers who may not fit traditional lending criteria. Stacy Speas, senior vice president at Cornerstone Servicing, noted that borrowers are increasingly dictating the types of loans they require, with debt-service coverage ratio (DSCR) loans and residential transition loans (RTLs) gaining popularity.
Impact on First-Time Buyers
Selma Hepp, chief economist at Cotality, expressed concerns that the strong presence of investors in lower price tiers is "crowding out first-time buyers." Although investor purchases in 2025 were about 25% below 2021 levels, they improved upon the previous year's monthly totals, with over 100,000 homes purchased in May, June, and July. The imbalance between sellers and non-investor buyers, with sellers outnumbering buyers by over 30%, has contributed to a challenging environment for first-time homebuyers.
Future Projections
Looking ahead, Cotality projects that investor purchase shares will remain above 25% through 2026 and 2027, as affordability constraints persist and home prices are expected to soften. The Mortgage Bankers Association anticipates mortgage rates will stabilize between 6% and 6.5%, while Fannie Mae forecasts minimal home price growth of 1.3% in 2026 and 1.2% in 2027. Hepp indicated that the shift from asset appreciation to rental cash flows is likely to continue, as inflation outpaces home price gains.
Criticism and Concerns
Despite the growth in non-QM loans, there are emerging concerns regarding the performance of these loans. Serious delinquencies have increased from 0.5% in mid-2022 to around 2% by early 2025. Hepp warned that rising unemployment or stagnant home prices could further pressure non-QM performance, particularly for investor-heavy pools.
Verbatim Quotes
- “affordability pressures coming from investor presence in the lower price tiers, and how that’s crowding out first-time buyers.” — Selma Hepp, Chief Economist, Cotality
- “It’s not as much of a heavy lift to go for a non-QM bank statement product,” — Susan Hosterman, Senior Director, Fitch Ratings
The evolving landscape of the U.S. housing market, characterized by a significant investor presence and the rise of non-QM loans, presents both opportunities and challenges for various stakeholders, particularly first-time homebuyers.
