Investor activity in the U.S. housing market saw a significant uptick in the second quarter of 2024, with purchases rising 3.4% year-over-year—the largest increase since mid-2022, according to a new report by Redfin, a real estate brokerage. Investors bought approximately one out of every six homes sold in the quarter, representing $43 billion in transactions, marking a 13.7% increase from a year earlier.
This surge follows a period of fluctuating investor activity during the COVID-19 pandemic, where purchases more than doubled during the 2021 homebuying boom, only to drop nearly 50% in 2023 due to declining rents and home values.
“Real estate investors are reentering the market to capitalize on strong rental demand,” said Redfin Senior Economist Sheharyar Bokhari. “High home prices and mortgage rates have pushed homeownership out of reach for many Americans, fueling demand for rentals. Investors, who often pay in cash, are well-positioned to benefit from this trend.”
Renter demand strong, but rent growth sluggish
While demand for rental properties remains robust, rent growth has been tempered by a wave of new apartment constructions initiated during the pandemic. However, with the pace of new builds slowing, rents could rebound in the coming years, potentially drawing more investors into the market.
Despite the renewed investor interest, overall home purchases in the U.S. fell 1.9% in the second quarter, as many potential buyers were deterred by elevated mortgage rates and home prices. Investors, however, were less affected, as 69% of them paid in cash.
Regional variations: San Jose and Las Vegas Lead, Fort Lauderdale lags
Investor purchases rose significantly in certain markets, with San Jose, California, and Las Vegas, Nevada, each experiencing a 27% year-over-year increase—the highest among the metros analyzed by Redfin. San Francisco and other California cities also saw notable gains, reflecting a broader recovery in the Bay Area’s housing market after a pandemic-driven slowdown.
Conversely, Fort Lauderdale, Florida, saw the steepest decline in investor purchases, down nearly 16%. High insurance rates and property taxes in the area were cited as factors deterring investment.
Single-family homes drive investor activity
The increase in investor activity was largely driven by single-family home purchases, which rose 6.7% year-over-year. Single-family homes made up nearly 70% of all investor purchases in the second quarter, the highest percentage since mid-2022. In contrast, investor purchases of multifamily properties, condos, and townhouses saw declines.
Investors also maintained a strong presence in the market for lower-priced homes, purchasing 24.1% of the most affordable homes that sold in the quarter. These properties accounted for 45.2% of all investor purchases, highlighting a trend where investors are increasingly focusing on the affordable housing segment.
Outlook: investors eyeing opportunities amid market shifts
As the housing market continues to adjust to post-pandemic realities, investor activity appears to be stabilizing near pre-pandemic levels. The ongoing demand for rental properties and the potential for rent increases as new construction slows may keep investors engaged in the market.
“San Jose has a lot of overseas investors buying sight-unseen and a lot of home flippers looking to make quick profits,” said Craig Pellegrini, a Redfin Premier real estate agent in the area. “There’s also a trend of parents buying second homes to rent out before passing them on to their children.”
In contrast, markets like Fort Lauderdale face challenges due to rising costs, which may continue to dampen investor interest in those areas.
As the year progresses, the housing market will likely continue to see varied regional trends, with investor activity influenced by local economic conditions, rental demand, and broader market shifts.
To view the full report, including charts, methodology and additional metro-level data, click here.
