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77 July 2025 J O U R N A L July 2025 » themortgagepoint.com in many West region markets, alerting investors to the possibility of profiting from rising home demand. In the same states, however, investor buyer and seller activity is still on the go. Investor activity is highly concen- trated in some areas, as evidenced by the similarity between the top states for investor sales and the top states for investor buyers. In 2024, the states with the highest percentage of investor sales were Oklahoma, Missouri, Georgia, Nevada, and Utah. It's fascinating to examine the net effect of investor activity, which is calculated by dividing the total number of transactions in a state in 2024 by the number of properties sold by inves- tors minus the number they bought. This is because states that are popular for investor buys are also popular for sellers. Investor activity had the biggest detrimental effect on housing supply in the following markets: 1. Hawaii 2. Montana 3. Washington, DC 4. Missouri 5. Wyoming On the other hand, certain markets experienced a net increase in investor activity. In other words, by selling, in- vestors contributed a net amount to the home supply. Investors had the biggest positive impact in California, Minneso- ta, Oregon, and Nevada, where they sold more properties than they purchased. As a percentage of home purchases, investor purchasing activity is generally still increasing. While overall home sales declined 5.4% in the first two months of the year, investors bought 0.9% fewer properties than they did in the same period last year. Thus, from 14.3% in the first two months of 2024 to 15% thus far in 2025, the investor buying share increased. As investors sold 6.2% fewer proper- ties than they did a year earlier, investor selling activity decreased from 12% of sales to 11.9%. Buyer activity is still being constrained by persistently high mort- gage rates and housing prices, which may indicate that investors' proportion of purchasers will continue to rise. Trends in investor activity are some- what at risk due to widespread eco- nomic uncertainty. In general, though, investors are expected to keep making investments in places with high housing demand and reasonably priced proper- ties. Although national rents are still de- clining, a decline in building may result in a future rental inventory shortage, which would present an opportunity for investors to take advantage of surplus demand for rental properties. HOMEOWNER EQUITY DROPPED IN Q1 AMID SLOWING PRICE GROWTH C otality has issued its Q1 2025 Homeowner Equity Report (HER), showing the geographi- cal and equity growth differences across the U.S., alongside other revolving trends. According to the research, home equity for U.S. homeowners with mortgages—who own about 62% of all properties—rose by $115 billion since Q1 2024, or a 0.7% annual growth. This increased net borrower equity to over $17.3 trillion in Q1 2025. Since Q2 2024, negative equity has been increasing every three months. The number of residential properties with negative equity rose by 172,000, or 17%, just from Q1 2024. "Strong home price appreciation since the pandemic has ensured that U.S. homeowners with a mortgage saw a significant rise in their home equi- ty, with annual gains averaging over $38,000 between 2020 and the end of 2022," said Dr. Selma Hepp, Cotality Chief Economist. "At the peak of home price gains, annual equity increases surged to as much as $55,000. However, with price increases slowing consider- ably and appreciation remaining slug- gish, home equity is unlikely to accumu- late at the same pace as it did during the pandemic, or even pre-pandemic, when annual gains averaged about $11,000. In addition, recent declines also reflect that some homeowners are tapping into their equity to finance other activities." The Top 10 States with the Highest Average Equity Gains 1. Rhode Island 2. New Jersey 3. Connecticut 4. Washington, D.C. 5. Massachusetts 6. Maine 7. New York 8. Illinois 9. Wisconsin 10. Wyoming Even though the proportion of homeowners who have a mortgage with negative equity has been gradually rising, it is still far lower than the rate before the pandemic and only marginal- ly higher than the Q2 2024 low. U.S. Borrowers Tap into Equity Gains Many other homeowners, especially in the Northeast, are profiting from the ongoing increase in property values and the ensuing increase in equity, even though 1.2 million residential homeown- The rising dominance of small investors was a noteworthy feature in the 2024 data.