Real Estate Investors Increasingly Buying Affordable Homes in Chicago and California

Despite a slowdown in overall market activity, investors are targeting lower-priced properties in Chicago and California. Find out more.

Investors showed a decrease in home purchases during the last quarter, according to a recent report by Redfin. However, those who did make purchases focused on lower-priced homes, intensifying competition for affordable properties among regular homebuyers. Despite a 10.5% year-over-year decline in investor purchases, they still made up a significant portion of total sales, accounting for 18% of all home purchases in Q4.

Investors primarily targeted lower-priced single-family homes, with 26% of all lower-priced home sales being attributed to them in the last quarter. This trend could further limit the accessibility of the housing market for typical homebuyers. The preference for affordable homes was evident in states like California and Illinois, where investor activity saw a notable increase over the past year.

In Riverside, California, investor activity surged by 25%, while Chicago saw a nearly 21% rise in investor purchases. The median price of homes purchased by investors in Riverside was $541,000, significantly higher than the median price in Chicago, which was around $235,000. California, known for its affordability challenges, saw seven of its metros, including Sacramento, San Diego, and Los Angeles, among others, experiencing a rise in investor purchases.

Despite high home prices in California, researchers anticipate continued interest from both regular buyers and investors in 2024. The potential for price growth, combined with strong demand and lower mortgage rates, makes California cities an attractive market for real estate investment.

While investor purchases may have decreased overall, their focus on lower-priced homes continues to impact the housing market, posing challenges for typical homebuyers. The evolving trends in investor activity highlight the ongoing competition for affordable properties in various regions.