Investor home purchases are rising—albeit slightly—for the first time in almost two years. Real estate investors bought roughly 44,000 U.S. homes in the first quarter of 2024, up 0.5% from a year earlier—the first increase since the second quarter of 2022.
The gain was primarily driven by an increase in purchases of single-family homes, which we’ll discuss in the following section.
This is based on a Redfin analysis of county home purchase records across 39 of the most populous U.S. metropolitan areas. We define an investor as any institution or business that purchases residential real estate.
Investor activity in the housing market is stabilizing following several years of dramatic ups and downs. Investor home purchases more than doubled during the pandemic homebuying boom in 2021, and then plunged nearly 50% at the start of last year as declining rents and home values ate into potential profits. But now, with home prices and rents back on the rise and the initial shock of elevated mortgage rates in the rearview mirror, investors are easing their foot off the brake pedal.
Investors are making more money than before: Investors are reaping bigger profits than they were a year ago. The typical home sold by an investor in March went for 55.2% more ($174,616) than the investor bought it for. That’s up from 46.3% ($146,586) a year earlier. Just 5.3% of homes sold by investors sold for a loss, down from 13.7% in March 2023.
Investor purchases also hit a low point in the first quarter of 2023—part of the reason they’re now rising on a year-over-year basis.
Investors are buying up the biggest chunk of U.S. homes in almost two years: While investors are purchasing fewer homes than they were before and during the pandemic housing frenzy—a result of today’s relatively slow market—they’re still purchasing a fairly high share of the homes. They bought 18.7% of U.S. homes that sold in the first quarter, up from 17.9% a year earlier and the highest percentage in almost two years.
Investors have seen their market share tick up because they’ve come off the sidelines faster than individual buyers; overall U.S. home purchases fell 3.9% from a year earlier in the first quarter as elevated mortgage rates deterred buyers (though it’s worth noting that’s the smallest growth in two years). Investors are less sensitive to mortgage rate fluctuations than regular buyers because most of them (69%) pay in cash, though they’re still somewhat sensitive because they often take out different loans to cover home flipping and other expenses.
“Investor activity is steady,” said Dallas Redfin Premier agent Connie Durnal. “When home prices got crazy high during the pandemic, investors sold out. But several months ago, they started to ramp back up. I’m not seeing a lot of home flippers in our market, but there are a lot of investors looking for single-family homes to rent out, which are in short supply.”
Investor purchases of single family homes rose 3.9% year over year in the first quarter, the first increase in nearly two years. Meanwhile, investor purchases of townhouses, condos/co-ops and multifamily properties fell 8.6%, 6.4% and 2.5%, respectively. Investors are likely keen on single-family properties because that segment of the market has posted relatively strong rent growth—AKA has stronger ROI potential—and also has lower tenant turnover.
Investors and individual buyers who are in the market to buy a home are often duking it over the same properties, according to Redfin agents. And in some cases, investors are losing.
“The balance of power between investors and regular buyers is changing,” said Amira Elgoneimy, a Redfin Premier real estate agent in New Jersey. “When there’s a bidding war for a home, it has become more common for the winner to be the person who actually plans to live in the home. Individual buyers are sitting on a lot of cash from the sale of their previous house and pandemic savings, so they’re willing to pay a little more upfront than investors, who have to be mindful of margins.”
Single-family homes represented 68.9% of investor purchases in the first quarter—the highest percentage since mid-2022. Meanwhile, condos/co-ops represented 18.7%, townhouses made up 7.2% and multifamily properties made up 5.3%—all down from a year earlier.
Investors have also gained market share in the single-family segment; 18.4% of U.S. single-family homes that sold in the first quarter were purchased by investors—the highest share since mid-2022. Meanwhile, the share of other property types bought by investors fell from a year earlier, to 31.9% for multifamily properties and 18.1% for both condos/co-ops and townhouses. Investors have a relatively large market share in the multifamily segment because those buildings are typically too expensive and not feasible for regular homebuyers, and apartments offer the potential for large returns from rental income.
Investor purchases of high-priced homes jumped 10.5% year over year in the first quarter—the first increase in nearly two years. Meanwhile, investor purchases of mid-priced homes rose 4.7% (also the first increase in nearly two years), and investor purchases of low-priced homes fell 6.5%.
Redfin divides home purchases into three buckets: low-priced, mid-priced and high-priced. Low-priced homes are those that fall into the bottom tercile of local sale prices, while mid-priced are those in the middle tercile and high-priced are those in the top tercile.
The typical home bought by investors in the first quarter cost $464,560, up 9.2% from a year earlier. Investors purchased $31.3 billion worth of homes in the first quarter, up 6.6% year over year.
Investor purchases of high-priced homes are on the rise in part because investors are buying more single-family homes, which tend to be more expensive than condos and townhouses. But they’re also on the rise because investors have been buying more homes in expensive California markets, which we’ll discuss later in the report.
While high-priced homes made up the biggest increase in investor purchases in the first quarter, low-priced homes were still the preferred property type. Low-priced homes represented 47.5% of investor purchases in the first quarter, while high-priced homes represented 28.5% and mid-priced homes represented 24%. Investors also have a relatively high market share in the affordable market. They bought a record 26.1% of low-priced U.S. homes that sold in the first quarter, compared with 16.4% of high-priced homes and 13.4% of mid-priced homes.
Investors are drawn to affordable homes for the same reason homebuyers are: They cost less, which is especially attractive when home prices and borrowing costs remain elevated. And when housing affordability is this strained, there could be more potential for value increases in the lower price tier, meaning more potential for building equity.
“Any home that is entry-level is immediately pounced on,” said Brian Connelly, a Redfin Premier agent in Boston. “There’s a mix of first-time homebuyers, investors and second-home buyers all fighting for homes.”
In San Jose, CA, investor home purchases jumped 27.8% year over year in the first quarter—the biggest increase among the metros Redfin analyzed. Next came Oakland, CA (22%), Minneapolis (21.6%), Sacramento, CA (20.1%) and San Francisco (18.5%).
The aforementioned metros also saw among the largest increases in overall home purchases in the first quarter. The Bay Area’s housing market has been bouncing back after slowing substantially during the pandemic. People aren’t moving out at the pace they were before, and California is now seeing some of the steepest increases in home prices and sales in the country, which investors may see as an opportunity.
Investor home purchases fell fastest in relatively affordable markets in the Midwest and on the East Coast. In Cincinnati, they declined 22.1% from a year earlier—the biggest drop among the metros Redfin analyzed. Next came Baltimore (-22%), Providence, RI (-20.2%), Virginia Beach, VA (-15.1%) and Chicago (-14.6%).
Where investors bought the highest/lowest share of homes that sold: Q1 2024
Where the share of homes bought by investors increased/decreased most from a year earlier: Q1 2024
Where investors had the largest median capital gains: March 2024
For this analysis, we looked at county sale records for homes purchased from January 2000 through March 2024. We define an investor as any buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes. We also define an investor as any buyer whose ownership code on a purchasing deed includes at least one of the following keywords: association, corporate trustee, company, joint venture, corporate trust. This data may include purchases made through family trusts for personal use.
We analyzed home sales in the 50 most populous metro areas, but only included 39 metros in this report due to non-disclosure of sale prices in some counties. The national figures in this report represent an aggregation of those 39 metros.
When we refer to a “record,” the record dates back to the first quarter of 2000. Data is subject to revision.
