1 in 5 Home Buyers Are Investors as 7% Rates Persist

One in five U.S. home purchases in September went to individual investors and second-home buyers, the highest share in a little over a year—even as mortgage rates stood at 7%. That’s a striking number in a housing market where affordability has become the central worry for people simply trying to buy a place to live.

The buyers behind that share aren’t spooked by borrowing costs. Justin Smith isn’t.

In June, Smith, 34, closed on a duplex in Roscoe, Illinois, about 90 miles west of Chicago. He paid $250,000, and his 30-year fixed mortgage carries a 7% rate. Smith works as a real-estate broker and already owns three apartment buildings in Roscoe and nearby Rockford, so the duplex adds to the portfolio he’s been building.

Who Is Buying

The September figure puts a number on a trend with consequences well beyond any one transaction. When individual investors and second-home buyers account for 20 percent of purchases, they compete directly with households that need a home to live in, not hold as an asset. Those buyers face the same 7% rates, but lack a portfolio, a broker’s license or existing rental income to lean on.

Smith describes the appeal in plain terms. Smaller Midwestern cities, he said, can offer an accessible entry into real-estate investing because home prices are relatively low. That access comes down to price—and price separates one kind of buyer from another.

The Price Gap

The figures behind Smith’s strategy show how wide that gap is. Zillow estimates the average home value in Rockford at about $185,000. The national median value is about $366,000. Put simply, a home in Rockford costs roughly half as much as a typical home nationally.

For an investor, that gap presents an opening. For a family priced out of more expensive metro areas, it raises another question: if investors see opportunity in lower-cost markets, who’s left to buy a first home there?

The source material doesn’t say how many investor purchases happened in markets like Rockford, or how many first-time buyers lost out in bidding. It also doesn’t give the year of the September data or Smith’s June closing. What it does establish is the buyers’ share and the rate they’re paying, and both point in the same direction: borrowing at 7% hasn’t driven investors out of the market.

What We Don’t Know

The article gives one investor’s story, not a full accounting. It doesn’t break down how much of the 20 percent comes from second-home buyers versus investors, or whether they’re financing those purchases with mortgages or cash. Those details would show how much of the market ordinary buyers can access—and how much they can’t.

Why This Matters: Housing is the largest asset most American families will ever own, and it’s also where they live. When one in five purchases goes to investors and second-home buyers, the market pulls in two directions at once: shelter for people who need it, and a return for people who can afford to wait. With mortgage rates at 7%, households without existing equity or rental income feel the squeeze hardest, while established investors like Smith can absorb the cost and expand. That’s a structural question about who gets to build wealth through property, and local zoning, lending rules and tax policy all help answer it. Lawmakers and regulators have tools to shape that balance, and the September figures show why the debate over using them isn’t going away.