This Report examines investor lending patterns for second homes and investment properties using Home Mortgage Disclosure Act (HMDA) data from the 2018-2024 period. While media attention often focuses on Wall Street investors, mortgage financed “mom and pop” investors represent a sizable portion of mortgage loans made each year. The mortgage market
experienced dramatic volatility during the COVID-19 pandemic, with a noticeable surge in investor purchases of single-family homes and lower-cost units in Sunbelt markets. Lending peaked at nearly 484,000 loans in 2021 before contracting by more than half through 2023. The data reveals substantial demographic disparities and geographic concentration patterns that vary significantly across markets. As we are inundated with messages that there is a housing shortage, the fact that we have enough housing to support a robust investor market suggests this is not simply an issue of a lack of supply.
This represents a fundamental resource allocation choice: mortgage capital finances property wealth accumulation for those already on the property ladder while first-time buyers face historic affordability barriers. The issue isn’t insufficient housing supply but rather a financing system where existing homeowners can tap accumulated equity to compete against aspiring first-time buyers. When renters face bidding wars against buyers leveraging existing home equity, the market systematically reinforces wealth concentration among property owners. The data from the 2018-2024 period reveals the scale of this capital flow and the demographic disparities in who accesses investor lending.
Jason Richardson, Senior Director of Research
Resources
For the complete series, including videos, interactive visualizations and localized market analysis, visit our 2025 Mortgage Market series homepage. NCRC members can request customized community data requests as well. Those interested in membership benefits should contact Ralph Cyrus (Membership Engagement Specialist) at rcyrus@ncrc.org.
Key Takeaways
1
Market Volatility: Investor lending surged 29.3% in 2021, reaching nearly 484,000 loans before contracting by more than half through 2023. However, the market recovered in 2024 by 7.2%. Mortgage capital flows readily to help existing homeowners expand their holdings while first-time buyers face historic barriers.
2
Geographic Concentration: Florida captured 17% of all national investor lending. Vacation markets like Vermont (20.5%) and Hawaii (20.3%) show the highest investor shares. Mortgage capital finances second homes in the same markets where local residents cannot afford to buy their first home.
3
Equity Leverage: Existing homeowners use accumulated home equity to outbid first-time buyers. The mortgage system enables those already holding property wealth to compete directly against aspiring homeowners, systematically reinforcing wealth concentration.
4
Market Bifurcation: Six lenders dedicate their entire portfolios to investor lending. The existence of specialized financing channels for property accumulation demonstrates a system designed to help those already on the property ladder climb higher, not those aspiring to climb on it.
5
Resource Allocation: The robust investor lending market reveals the core problem isn’t just housing scarcity but capital allocation. When the financing system can deliver nearly half a million loans annually to help people buy second and third properties, claiming there are insufficient resources to expand homeownership access is a policy choice and not a true economic constraint.
Methodology
This analysis uses Home Mortgage Disclosure Act (HMDA) data from the 2018-2024 period to examine lending patterns for non-owner-occupied properties. HMDA categorizes mortgage loans by occupancy type: owner-occupied, second residence or investment property. We combined second residences and investment properties into a single “investor loan” category since both result in single-family properties that are unavailable for owner occupancy and since home purchases are often speculative in nature.
The analysis includes all closed-end, site-built, 1-4 unit home purchase loans reported to HMDA. We calculated investor shares as the percentage of total loans that were made for non-owner-occupied properties within each demographic or geographic category. However, HMDA captures only mortgage-financed transactions. Cash purchases and institutional investor activity, such as private equity purchases of single-family rental homes, are not included in this data. In turn, actual investor activity in local markets may be substantially higher than HMDA data indicates.National Market Trends
After stable activity throughout 2019, the pandemic brought unprecedented growth in investor lending. Lending to borrowers seeking a business opportunity rather than a place to live peaked at nearly 484,000 loans in 2021, coinciding with extraordinary home equity gains documented in Part 4 of our series. The subsequent contraction was equally dramatic as interest rates more than doubled. However, 2024 showed a growth recovery rate of 7.2%.
Investor home purchase lending surged 29.3% in 2021 during the pandemic housing boom, reaching 483,681 loans and capturing 13.8% of the total mortgage market. This spike represented a predictable response to the combination of ultra-low interest rates and skyrocketing home prices. Investors are able to lock in cheap financing while acquiring properties in markets were rapid appreciation made homeownership increasingly unattainable for typical buyers. The economic disruption to working families likely delayed the transition from renting to owning for many first-time buyers, trapping them in rentals where they paid an ever-increasing share of their income for housing.
The market contracted sharply in 2022 and 2023 as rising interest rates reduced the profitability of rental property investments. Investor lending dropped 26.1% in 2022 and another 32.4% in 2023, falling to 241,603 loans. The 2024 data shows a modest recovery with 258,899 investor loans, representing 7.2% growth year-over-year. Despite this uptick, investor lending remains 46.5% below the 2021 peak. However, as a share of the total market, investor lending remains substantial at an average of 10% to 11% per year.
Geographic Patterns
States with Highest Investor Activity (2024)
The following table ranks states by their investor share, which shows the percentage of all home purchase loans made for non-owner-occupied properties (second homes or investment properties):
Vacation and retirement destination states show the highest investor concentration. Vermont and Hawaii exceeded a 20% investor share, while Florida leads in absolute volume with 44,301 investor loans — 17% of all investor lending nationwide.
Fastest Growing Metro Markets (2018-2024)
The following table shows percentage point growth in investor share between 2018 and 2024. Cleveland’s 7.3 percentage point increase represents a 114% proportional increase from its 2018 baseline. Cleveland also has the largest percentage point increase in investor activity, with investor share rising 7.3 percentage points (from 6.4% to 13.7%) between 2018 and 2024.
While Atlanta shows a moderate 9.8% investor share according to HMDA’s mortgage data, federal data indicates 25% of single-family rental homes in metro Atlanta are owned by corporate investors. Large corporate buyers control just over 3% of the single-family rental market nationally, but their impact is considerably more significant in specific local markets like Atlanta, Phoenix and parts of Florida. This demonstrates how HMDA data captures only mortgage-financed activity and not cash purchases or institutional investors.
Demographic Patterns
Asian borrowers’ participation rate in investor lending sits at 19.5%, nearly four times the rate of Black borrowers at 5.1%. This 14.4 percentage point gap is indicative of substantial differences in access to wealth-building through real estate investment.
Even among upper-income borrowers, substantial disparities persist. Asian upper-income borrowers participate at 21.5%, compared to 8.3% of Black upper-income borrowers. These gaps exist despite similar income levels, reflecting differences in accumulated wealth, family support for down payments and access to investment capital that income alone does not capture. Real estate investment has historically been a primary vehicle for intergenerational wealth transfer, making these participation gaps significant for long-term wealth building.
Market Structure
Build-to-Rent Operations
Many of the country’s largest home builders are dedicating considerable resources to Build-To-Rent (BTR) operations. Unlike traditional builders that primarily sought owner occupants, these properties are specifically built and marketed to investors of all sizes. In Part 6 of this series, we examined builders that offered their own mortgages to homebuyers. Many of those builders are also constructing thousands of homes annually for the BTR market.
BTR developments represent a structural shift in housing construction, where properties are designed from inception for rental rather than owner occupancy. This model serves the specialized investor lending market and contributes to the growing share of single family homes operated as rentals.
The existence of this industry and market is a direct challenge to the idea we have a physical shortage of housing. The homes often exist, but are not available to renters that want to live in them, older adults that might want to downsize, or existing owners that want to upgrade or relocate.
Lender Patterns
Volume Leaders vs. Specialists (2024)
The investor lending market is currently split into two distinct segments: high-volume traditional lenders who serve investor borrowers alongside owner-occupants and pure specialists who exclusively originate investor loans. The top investor lenders include both national mortgage giants and specialized firms unknown to most homebuyers.
Rocket Mortgage and United Wholesale Mortgage, the two largest mortgage originators in the United States, originated over 29,000 investor loans in 2024 while maintaining investor shares below 20%. In contrast, six pure specialists, including Kiavi Funding and Loan Funder, dedicated 100% of their portfolios to investor lending despite originating fewer total loans.
This market structure reflects fundamental differences in underwriting criteria. Owner occupants evaluate properties based on affordability, proximity to work or schools and household needs. Investors evaluate properties solely on income potential, or whether projected rents or other revenue streams can service the debt.
Specialist lenders have developed underwriting models specifically tailored to this investment calculus, assessing property cash flow potential, rental market conditions and investor experience rather than traditional homebuyer factors, like commute times or school districts. This dynamic creates parallel lending ecosystems where investor borrowers frequently work with different lenders, applying different approval criteria than traditional homebuyers.
Conclusion
Investor lending patterns reveal substantial variations across demographic groups and geographic markets. Asian borrowers participate at nearly four times the rate of Black borrowers, with gaps persisting even among upper-income borrowers. The main geographic concentration are vacation and retirement destinations attracting disproportionate investor activity, while markets like Cleveland experienced dramatic growth.
The market’s bifurcation between traditional lenders and pure specialists suggests different pathways for accessing investment capital. Further research connecting HMDA mortgage data with cash purchases would provide a more complete picture of investor activity. HMDA captures only mortgage-financed transactions and not the significant cash and institutional investor activity that shapes many communities.
This investor lending analysis concludes our seven-part examination of mortgage market dynamics by building upon the trends identified in Part 1, the demographic disparities in Part 2 and Part 3 and the geographic patterns in Part 4. In Part 5 of the series, we looked at the top 50 home purchase lenders and how they vary in service to historically underserved populations. Part 6 of the series looked at the key role that homebuilders and their subsidiary lenders can play in the expansion of homeownership opportunities.
Resources
For the complete series, including videos, interactive visualizations and localized market analysis, visit our 2025 Mortgage Market series homepage. NCRC members can request customized community data requests as well. Those interested in membership benefits should contact Ralph Cyrus (Membership Engagement Specialist) at rcyrus@ncrc.org.
Mortgage Market Series
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