Since the pandemic housing boom began in the late spring of 2020, investors have flooded the U.S. housing market.

In 2021, investor home purchases grew by 39% compared to 2019 (2020 is not counted because of the drag from the pandemic). Many investors targeted houses at the lowest tiers of affordability to feed the massive demand for single-family rentals.

In the first quarter of 2022, investors made up a record 28% share of all home purchases, up from 19% in the first quarter of 2021, and far above the 16% share between 2017 and 2019.

Most of these purchases were made by small or midsize investors looking to increase their portfolios. According to the Harvard Joint Center for Housing Studies, 74% of investor purchases in 2021 were made by buyers who owned fewer than 100 properties. This included mom-and-pop landlords, short-term rental hosts (think Airbnb) and even a resurgent group of home flippers. With the combo of low mortgage rates, easy access to capital, and record home appreciation, real estate was enticing.

The rush was most pronounced in the South and West, where the ratio of investor purchases topped 32% in Atlanta, Jacksonville and Charlotte, NC. Nearly 30% of Sales in Phoenix were investors.

In these areas, increases were driven by “large” investors, who bought roughly 1 of every 3 investor-bought homes, taking market share from both small and medium-sized investors.

Even when investors are on the losing side of a bidding war, they still put upward pressure on prices. But as rising mortgages slam the door on affordability, investors begin to pull back.

Some of these investor-driven markets are among the most overvalued in the country and could be primed for price drops.

Small investors may back off, too. For “mom-and-pop” buyers who planned to make monthly payments with the rent, higher mortgage rates change the math. It remains to be seen if the investor-driven housing market continues, or if it was just a temporary trend.

Investors still scooped up 9.5% of homes sold in April, taking more inventory off the market than they added to it. Investors sold 24% more homes than during April of 2021.

The Pandemic Housing Boom also saw a surge in “iBuying” – made up mostly of online firms who make swift offers to home sellers, then quickly put the home back on the market.

On each sale, iBuyers net a "service fee" from the seller in exchange for the speedy transaction. During the pandemic, iBuyer and institutional buyers jumped from around a 1.5% market share of purchases to around 4.5%, according to Freddie Mac.