R
ecent research from CoreLogic highlights the significant contribution of smaller investors, often referred to as mom-and-pop landlords, who typically own three to ten properties. Despite a modest 2% increase in Q3 2024 compared to mid-year, U.S. real estate investor activity is expected to remain sluggish due to elevated mortgage rates and home prices.

    Smaller-scale investors continue to support home prices despite softened demand, but historical data shows no consistent correlation between their activity and price fluctuations. In fact, the share of total home sales attributed to investors has hovered near 25% for the foreseeable future.

    Investor purchases declined in Q3 2024, with a total of 85,000 monthly purchases, down from an average of 140,000 and 120,000 in Q3 2021 and 2022, respectively. This decline is attributed to elevated interest rates, high home prices, and uncertain economic conditions.

    Despite these challenges, investors have continued to favor lower-priced and moderately priced homes, increasing competition for affordable housing, particularly in the Sun Belt and emerging suburban markets. Dallas and Houston remain the top metropolitan areas for investor purchases, with Los Angeles ranking high despite relatively low transaction levels.

    Mom-and-pop investors dominate, accounting for 60% of investor purchases nationwide, while institutional investors make up less than 5% of transactions in most top-20 metro areas. Regional variations in investor share show declines in most markets between Q3 2023 and Q3 2024, with the largest drops occurring in the South, Mountain West, and lower Midwest.

    The decline in investor activity highlights their critical role in maintaining market balance, particularly in slower markets where high rental demand persists. A nuanced understanding of investor influence is essential to addressing market challenges and identifying opportunities for sustainable growth.