Investors Snatch Record 14.8% Of Homes – What Does It Mean For Regular Homebuyers Being Pushed Out Of The Market In These Top Cities?
Investors are often cash buyers with deeper pockets and more leverage to close a deal fast, making it difficult for the average homebuyer to get in on a deal. In hot markets, where property prices are low, but rent prices are high, investor buying has reached a new high.
Is there a risk for would-be first-time homebuyers? Of course. No one wants to compete with an all-cash, full-time offer that many investors, especially large investment firms, can make.
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According to a report compiled by Realtor.com based on deed records nationwide, small investors outpaced large investment firms in the 150 largest U.S. metros for single-family homes, condos, townhomes, and row houses from January 2000 to March 2024.
There’s a good chance you’re friends with a small investor who has bought fewer than 10 properties since 2001. From January to March 2024, small investors made up 62.6% of investor purchases, up 6.4% from the same period in 2023. Is that any better for a community? While the local connection could be a plus, investors aren’t necessarily buying close to home.
Instead, they’re buying mostly in the same Midwest and Southern metropolitan areas that are affordable for first-time homebuyers. While adding to the rental property pool, they’re depleting access to affordable homeownership, putting Millennials even further from possible homeownership in many cases.
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Investors are still buying faster than they’re selling, with roughly 8,000 new properties purchased in March 2024 alone.
Don’t believe us? Investors could purchase a three-bedroom, two-bathroom home in the top five cities for under $200,000. One is for sale in Springfield, MO, for $189,900. Choosing a four-bedroom, two-bathroom home in Memphis, TN, for just $144,900 makes spending many times that seem crazy.
The top five cities for investors in the first quarter of 2024 were 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%). While these areas have seen significant price growth since 2019, they still fall below the national median, increasing investor appeal.
Here’s a summary of the top five markets by investor share:
Metropolitan area | Median home price | Investor share of the market |
Springfield, MO | $247,028 | 20.5% |
Kansas City, MO | $287,115 | 20.1% |
St. Louis, MO | $203,667 | 18.9% |
Birmingham, AL | $225,833 | 18.7% |
Memphis, TM | $223,135 | 18.2% |
The only good news for would-be new homebuyers or first-time investors? Most small investors leverage debt to make purchases, and you could, too. You’re not competing against all-cash buyers. But with these markets growing, you’ll want to get in fast. Find the best mortgage lenders for first-time homebuyers to guide you through the process, or even find interest-only lenders while you get your home or rental ready!
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This article Investors Snatch Record 14.8% Of Homes – What Does It Mean For Regular Homebuyers Being Pushed Out Of The Market In These Top Cities? originally appeared on Benzinga.com
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