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Mortgage rates and home prices may still be near record highs thanks to a lackluster supply of housing, but that hasn’t stopped real estate investors, according to the latest report on investor purchases in Q1 from Realtor.com.

While the number of investor purchases is below what it was during the pandemic, falling to the lowest level since 2020, the number of investor buyers accounted for 14.8% in the first quarter of 2024—the highest share on record.

In other words, though “investors took a bigger piece of the pie than in any other quarter, the pie was much smaller,” Hannah Jones, Realtor.com’s senior economics research analyst, wrote in a press release. 

Investors are purchasing fewer homes, but their share growth has increased, which could be partly to do with an overall slowdown in home sales. Home sales nationwide have fallen to the lowest level in 10 years. And while investors purchased the same amount of homes as in the first quarter of 2023, noninvestor purchases declined 6.1%, according to Realtor.com.

But compared to pre-pandemic levels, investors are buying more—they purchased 10.6% more homes in the first quarter of 2024 compared to the same quarter in 2019.

So, while there might be a general slowdown compared to the rush of homebuying seen a few years ago, more investors are increasingly turning to real estate. 

A Changing Investor Landscape? 

One thing that’s changed since the pandemic is that there are fewer all-cash buyers and more smaller investors.

During the height of the pandemic buying frenzy, many buyers would use cash to outbid others. Investors were more likely to pay with cash, as they likely had access to capital, Jones wrote. However, the share of investors using cash fell to 64% in the first quarter of 2024 from 69.7% at the peak of cash buys during the fourth quarter of 2021.

This change is a combination of fewer larger investors having cash available to buy and more smaller investors investing in real estate and using debt to invest, Jones explained.

In the first quarter of 2024, small investors made up 62.6% of investor purchases, the highest share on record, according to Realtor.com. They are also investing more, with a rise of 6.4% in properties purchased by small investors. 

Meanwhile, the share of large investor purchases has slumped by 13.9%. Compared to the same period in 2019, small investor purchases were up 34.3% higher in the first quarter of 2024, while medium and large investor purchases slipped by 4.9% and 22.3%.

 In other words, there may be more appetite for real estate among smaller investors. 

Where Investors Are Buying 

So, where exactly are investors buying? According to Realtor.com, the metro areas with the highest share of investors are in the Midwest and South. The Midwest, it noted, was favored by investors because metro areas there tend to be lower priced while rents tend to increase.

These are the top five areas with the highest share of investor purchases: 

Metro Area	Total Investor Buyers	Year-Over-Year Change	Investor Buyer Share	Year-Over-Year Change	Median Sale Price	Investor Median Purchase Price	Total Investor Sellers
Springfield, MO	562	-19.00%	20.50%	-1.70%	$247,028	$310,333	452
Kansas City, MO-KS	2,324	15.10%	20.10%	2.00%	$287,115	$215,594	1,889
St. Louis, MO-IL	2,552	5.60%	18.90%	0.50%	$203,667	$102,542	2,105
Birmingham-Hoover, AL	1,231	28.20%	18.70%	3.00%	$225,833	N/A	968
Memphis, TN-MS-AR	1,018	2.50%	18.20%	-0.10%	$223,135	$123,950	1,016

Meanwhile, investor activity has picked up in metro areas that are more affordable, such as Montgomery, Alabama, and Youngstown, Ohio, with investor share rising between 3.6% and 6.4%. In general, these areas have seen steady investor growth since 2020, according to Realtor.com.

Some metro areas also saw an uptick in growth compared to pre-pandemic levels. Out of the 150 largest metro areas, only 13 saw a lower share of investor buyers in 2024 compared to 2019. Many of the areas with the largest growth have seen a significant increase in pricing, but prices have stayed below the national median, driving the interest from investors.

These five areas saw the most growth in investor purchases versus 2019:

The Bottom Line 

It’s not just institutional investors and ultra-wealthy individuals buying real estate—there’s increased interest among smaller investors. More and more investors are leveraging debt to purchase homes as rentals in low-priced areas with the potential for growth.

And while home sales are slumping, it seems investors aren’t giving up. Although the frenzy of homebuying seen in the early days of the pandemic is gone, investors are still looking and finding opportunities.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.