Mom-and-Pop Investors Are Quietly Shaping the Housing Market

Why institutional investors aren’t the housing market’s biggest players

Investor activity in the U.S. housing market is often associated with deep-pocketed institutional buyers, but data from Q3 2024 paints a different picture.

Investor Activity Is Lackluster in Q3, Shows Small Gains 

Investor share has dropped from its high of nearly 30% in January 2024, and activity is expected to decline in the coming year.  

In June of this year, the share of single-family purchases by investors dropped to 23%. While the share of investors increased to 25% by September, the overall percentage of investors was lower than the same time last year, when it hovered at 28%.  

Figure 1 shows the share of home purchases made by investors alongside monthly price appreciation since January 2019. Trends indicate that the lower share of investors at this point in the year may be an early signal that investor share will not rise substantially going into the winter. 

Generally, investor share of the market follows a seasonal pattern. In the summer, owner-occupied buyers come into the market and investor share drops. Come fall, that trend begins to reverse and continues through the winter before turning around again in the early spring. But this year may present a different story. 

It’s not just the share of investors that is shrinking. The number of purchases that they are making is also less. Figure 2 shows the number of U.S. home purchases made by both investors and non-investors from January 2019 to September 2024.  

 
In Q3 of 2024, investors averaged 21,000 purchases per month less than in Q3 of 2023. The decline to 85,000 monthly investor purchases this quarter is even more pronounced when compared to the third quarter of 2021 and 2022 when the average number of purchases per month was 140,000 and 120,000, respectively. 

Investor Activity Is Shifting: What It Means for the Market 

As the total number of purchases continues to slide, interest rates remain elevated, housing prices are high, and economic conditions are in flux, property investment may be becoming less attractive. Faced with these headwinds, it is not clear what may draw investors back into the market at previous levels. 

Nevertheless, investors maintained their historical spending patterns across price tiers in Q3 2024, preferring cheaper and average-priced homes to expensive ones, as illustrated in Figure 3. Figure 3 shows investor shares by MSA price tier². 

The large investor preference for lower-priced homes makes sense since that is where most renters look to rent. At the same time, this tier is also where many buyers with limited means, like first-time homebuyers, are looking to purchase homes. As a result, the large investor presence in these tiers means increased competition for buyers. 

Across regions like the Sun Belt and emerging suburban hubs, investors are redefining neighborhoods, buying up properties and often converting them into high-demand rentals. While these investments reflect strong growth in local economies, they’re also sparking heated debates about their role in exacerbating housing shortages and driving rent inflation.  

Where Are Investors Making the Greatest Number of Purchases? 

Dallas and Houston remain the U.S.’s top metropolitan statistical areas (MSAs) for both investor and non-investor purchases, as exemplified in Figure 4. Atlanta, Los Angeles, and Phoenix round out the top 5 most active MSAs. Atlanta and Phoenix have high transactions volumes, so this ranking is not surprising.  

Los Angeles is a more interesting case. Although the MSA has a large population, it has low transaction levels. Despite this, it has the fourth-highest level of investment activity in the nation, underscoring investors’ interest in the market. If activity from neighboring Riverside, California, which has the eighth-highest level of investor purchases in the U.S., is added to the equation, it’s clear that there is strong investor interest in Southern California.   

While there is a large focus on institutional investors, mom-and-pop investors actually make up 60% of investor purchases. There is no MSA in the top 20 where mega-investors make more than 5% of the purchases. 

Los Angeles, which has garnered significant interest from investors recently, has the highest total investor share in the U.S., with 42% of purchases transacted by an investor. However, only 2% of purchases were made by mega-investors in 2024. 

Figure 5 shows the investor share for the same metros in Figure 4 but broken down by investor size. 

In all these markets, most investors are small (defined as owning less than 10 properties at the time of purchase) or medium (10 and 100 properties). Large (100-1000 properties) and mega (1000+ properties) make up a very small share of total purchases. 

Location Remains as Important as Ever for Investment 

While there has been widespread decline in investor share between Q3 2023 and Q3 2024, South Dakota, Oregon, and the District of Columbia saw increases in investor share. 

Meanwhile, Idaho, Montana, and Maryland saw the biggest declines at 5.7%, 5.3%, and 5.1%, respectively. Many markets in the South, Mountain-West, and lower Midwest also saw declines in excess of 4%. 

However, not all markets saw such steep drops. Markets in the Northeast, Upper Midwest, and the West Coast recorded smaller declines of between 0% and 2%.  

These declines appear to mirror the price appreciation patterns seen in CoreLogic’s Home Price Index, supporting the idea that investors may be stepping up to supply demand in a slow market and prevent price declines. 

While this overall flattening of investor activity could ease competition for some buyers, it also highlights the delicate balance that mom-and-pop investors maintain in the housing ecosystem. As mortgage rates appear unresponsive to the drops in the federal fund rates and CoreLogic data indicates that overall housing prices will remain elevated, there is reason to believe that these factors will drive high rental demand and continue to increase competition for first-time homebuyers. 

As conversations around affordability and market dynamics continue, understanding the true scope of investor influence is critical to framing the challenges and opportunities ahead. 

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¹ Non-investors are those who do not meet the CoreLogic definition for an investor. Only arm-length purchases are considered.

² Price tiers pool together all MSA sales for the month and divide them into thirds based on sales price.

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