Real estate investors are snapping up a record number of homes—especially in these 5 affordable cities
The average homebuyer might be feeling sidelined under the weight of high interest rates, but real estate investors are stepping in to snatch up a record share of homes.
Investors made up 14.8% of home purchases in the first quarter of 2024—the highest percentage in the data’s history (dating to 2001), according to the Realtor.com® 2024 Q1 Investment Report.
In 2023, investors claimed an average of 13.1% of homes sold each month, down slightly from 13.8% in 2022. But that number is on the rise.
“Investors are generally the first to pull out of the market, as seen in 2023, as well as the first to reenter, which we are seeing signs of now,” Realtor.com senior economic research analyst Hannah Jones says in her analysis.
Small-investor activity skyrockets
From January to March 2024, small investors (defined as having purchased 10 or fewer homes since 2001) made up 62.6% of investor purchases. That’s the highest small-investor share since our data commenced in 2001.
Small investors also bought up 6.4% more homes than the same time period in 2023, while medium- (11 to 50 homes) and large-investor (50-plus homes) purchases tumbled by 3.8% and 13.9%, respectively.
According to the report, medium- and large-investor activity ramped up during the COVID-19 pandemic as larger companies with bigger resources purchased more properties.
“But once home prices and mortgage rates reached new heights, bigger investors pulled back and the small-investor share started to climb once again,” says Jones.
Hot metros for real estate investors
In a financial climate plagued by high interest rates and rampant inflation, investors are looking for affordability. As a result, the areas with the highest share of investors in the 150 largest U.S. metros tend to be in the Midwest and South.
Homes in Midwest metros are relatively low-priced on average, and rents in those areas are on the rise, which is a win-win for investors.
“More buyers may be choosing to invest in affordable markets that need more rental inventory in order to secure a steady stream of rental income,” says Jones.
Missouri is a particularly hot market right now. Three of the top five markets seeing the highest share of investors during the first quarter of 2024 were in the Show Me State.
Investors in Springfield, MO, purchased around 1 in 5 homes (20.5%), which was the highest share among the 150 largest metros. Kansas City, MO, and St. Louis, MO, saw 20.1% and 18.9% of purchases go to investors, respectively.
Southern metros also attracted investors with lower-priced homes and rising rental rates. The two Southern metros that rounded out the top five were Birmingham, AL (18.7%), and Memphis, TN (18.2%).
Investor activity surges above pre-pandemic levels
Certain cities have seen a surge in investor activity since pre-pandemic times. The top five are Savannah, GA (up 8.3%), Youngstown-Warren-Boardman, OH-PA (up 7.9%), Peoria, IL (up 7.2%), Springfield, MA (up 6.4%), and Montgomery, AL (up 6.3%).
These areas have seen significant price growth since 2019 but still fall below the national median, according to Jones, which increases investor appeal.
For investors, cash is no longer king
During the pandemic, investors often made all-cash offers to help them win bidding wars. At the peak, in the fourth quarter of 2021, 69.7% of investors purchased in cash.
However, the share of investors purchasing in cash fell to 64% in the first quarter of 2024. That’s the lowest it’s been since 2008.
Why the sudden drop?
“All investors expanded their use of debt financing, and the mix of investor buyers shifted to small and medium investors, who are somewhat more likely to use debt over cash,” says Jones.
Investors still buy more than they sell
In March 2024, investors bought roughly 8,000 more properties than they sold.
“Investors benefit from high rents and high rental demand and are therefore less likely to sell off properties,” explains Jones.
These homes contribute to rental inventory, she says, but further limit already scarce for-sale inventory.
Research methodology
To come up with its findings, Realtor.com checked deed records nationwide and in the 150 largest U.S. metros for single-family homes, condos, townhomes, and row houses from January 2000 to March 2024.
Realtor.com analyzed only absentee owners with a name that includes “LLP,” “LP,” “LLC,” “GP,” or “TRUST,” and excluded keywords and sales that were likely related to homebuilders, relocation companies, government bodies, and financial institutions.
Multifamily buildings and established home-flipping businesses were not included in the analysis. Small investors not registered under a company name, generally making up more than a third of individual investors, were also excluded in this report.
