Mortgage rates and home prices likely to remain near record highs amid economic downturn housing supplybut that hasn’t stopped real estate investors, according to latest report Investors purchased from Realtor.com in the first quarter.
Although the number of investor purchases was lower than during the epidemic and fell to the lowest level since 2020, the proportion of investor purchases in the first quarter of 2024 was 14.8%, the highest proportion on record.
In other words, while “investors got a bigger piece of the pie than in any other quarter, the pie was much smaller,” Hannah Jones, senior economic research analyst at Realtor.com, said in a note the press release reads.
Investors are buying fewer homes but increasing their share, which may be partly due to and one Home sales slow overall. National home sales have fallen to their lowest level in 10 years. And at the same time Investors purchased the same quantity The number of homes purchased by non-investors fell 6.1% through the first quarter of 2023, according to Realtor.com.
But investors are buying more compared to pre-pandemic levels – buying 10.6% more homes in the first quarter of 2024 compared with the same quarter in 2019.
So while prices may be generally slowing compared to the home-buying boom seen A few years ago, more and more investors started turning to real estate.
Is the investor landscape changing?
One thing that has happened since the pandemic is that there have been fewer all-cash buyers and more small investors.
At the height of the pandemic buying frenzy, many buyers were outbidding others with cash. Investors are more likely to pay cashas they may have access to capitalJones wrote. However, the share of investors using cash fell from 69.7% at the peak of cash purchases in the fourth quarter of 2021 to 64% in the first quarter of 2024.
This variation is a combination of less bigger Investors have cash to buy, while more small investors invest in real estate and use debt to do so, Jones explained.
exist In the first quarter of 2024, small investors accounted for 62.6% of investor purchases, the highest share in historyaccording to Realtor.com. Their investments also increased, with small investors purchasing 6.4% more properties.
At the same time, the share of purchases by large investors fell by 13.9%. Compared with the same period in 2019, small investor purchases increased by 34.3% higher In the first quarter of 2024, buying volume by mid-sized and large investors fell by 4.9% and 22.3% respectively.
In other words, small investors may be more interested in real estate.
Where investors buy
So, where do investors buy? According to Realtor.com, the metro areas with the highest proportion of investors are in the Midwest and South. The report noted that the Midwest is favored by investors because metro areas there tend to have lower prices and rents tend to rise.
Here are the five areas where investors are buying the most:
| metropolitan area | Total number of investor buyers | Year-on-year change | Investor buyer share | Year-on-year change | Median selling price | Investors buy at median price | Total number of investor sellers |
|---|---|---|---|---|---|---|---|
| Springfield, Missouri | Chapter 562 | -19.00% | 20.50% | -1.70% | $247,028 | $310,333 | Chapter 452 |
| Kansas City, MO-Kansas | 2,324 | 15.10% | 20.10% | 2.00% | $287,115 | $215,594 USD | 1,889 |
| St. Louis (Missouri-Illinois) | 2,552 people | 5.60% | 18.90% | 0.50% | $203,667 USD | $102,542 USD | 2,105 people |
| Birmingham-Hoover, Alabama | 1,231 | 28.20% | 18.70% | 3.00% | $225,833 | not applicable | 968 |
| Memphis, Tennessee-Mississippi-Arkansas | 1,018 | 2.50% | 18.20% | -0.10% | $223,135 | $123,950 USD | 1,016 |
Meanwhile, investor activity has picked up Cheaper metro areassuch as Montgomery, Ala., and Youngstown, Ohio, where investor share rose 3.6% to 6.4%. Generally speakinginvestors in these areas have grown steadily since 2020according to Realtor.com.
Growth is also up in some metro areas compared with pre-pandemic levels. Among the 150 largest metro areas, only 13 will have a lower proportion of investor-buyers in 2024 than in 2019. Prices rose sharply in many of the fastest-growing areas, but prices remain below the national median, pushing investor interest.
Compared to 2019, these five areas saw the fastest growth in investor buying:
bottom line
It’s not just institutional investors and the super-rich who are buying real estate, there’s also growing interest from smaller investors. More and more investors leveraged debt Buy a house to rent in a low-priced area Growth potential.
Despite the decline in home sales, investors don’t seem to be giving up. Even though the home-buying frenzy of the early days of the pandemic has passed, investors are still looking for opportunities.
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