Investors are snatching up 1 in 5 homes for sale in new hurdle for buyers

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ResiClub co-founder and editor-in-chief Lance Lambert discusses the U.S. housing affordability crisis on 'Making Money.'

Homeownership has slipped out of reach for millions of Americans thanks to the astronomical rise in mortgage rates and an ongoing inventory shortage.

Now, there is another obstacle to buying a home: Investors and hedge funds are snatching up properties at the fastest pace in nearly two years, according to new findings published by Redfin.

Real-estate investors bought about 44,000 homes in the first quarter of 2024, up half a percent from the previous year – the first increase since 2022. The gain was primarily driven by an uptick in purchases of single-family homes. 

Although investors are scooping up fewer homes than they did before the pandemic began, they're still purchasing a «fairly high» share of the homes. In fact, in the first three months of the year, investors bought almost 19% of homes that sold, the highest percentage in nearly two years. That means investors bought just about one in five homes for sale in the three-month period from January to March. 

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Homes in the Issaquah Highlands area of Issaquah, Washington, on April 16, 2024. (Photographer: David Ryder/Bloomberg via Getty Images / Getty Images)

«With home prices and rents back on the rise and the initial shock of elevated mortgage rates in the rearview mirror, investors are easing their foot off the brake pedal,» the report said.  

One reason that investors are coming off the sideline is because they are earning more money than they were just one year ago. As of March, the typical home sold by an investor garnered a 55% return, or about $175,000 in profit.