Where Are the Investors?

Shifts are occurring in the 2024 real estate market as investors flock to emerging hot spots and retreat from traditional strongholds.

Real estate has always been local—and trends in the 2024 housing market are proving that out with substantial market variance in retail market inventory, home price appreciation, and even foreclosure starts.

These retail trends, in turn, impact interest from local community developers buying on Auction.com.

“Chattanooga has just been flooded with investors from California and other places … there’s not property that you can buy and afford there,” said Steve Johnson, an Auction.com buyer who lives in Chattanooga but decided to start buying properties across the border in Georgia when he was priced out of Chattanooga. “These smaller, less urban counties and cities—they are gold mines for finding properties that are under the radar for big-time flippers, big-time investors. But there are a tremendous number of people looking for a home.”

Atlanta-based Auction.com buyer Sue McCormick told a similar story.

“I wanted to start investing, but Atlanta is a bit expensive,” said McCormick, who decided to start investing instead in Dayton, Ohio, where she grew up. “I started investing in my hometown because it was easier to get into.”

Bidding Activity As A Retail Market Barometer

Bidding and buying activity from investors like McCormick and Johnson acts as a reliable barometer of local retail market strength.

Specifically, the share of buyers in each market purchasing outside of their local market provides insight into which markets are most attractive—and least attractive—to buyers willing and able to invest outside their local market.

These geographically flexible buyers are more likely to target markets based on the underlying strength and opportunity in those markets rather than on the convenience and comfort that come with buying in their backyard.

Doing Well By Doing Good

Even so, many of these geographically flexible buyers are emotionally connected to the market or markets where they choose to invest.

“My passion is really going back into the neighborhoods I grew up in and help enhance those areas and make money,” said McCormick, who continues to hold down a regular “day” job even while she invests.

Johnson grew up in Georgia and frequently traveled there for his day job before he retired several years ago. Helping people buy a home they can afford—something his family growing up was never able to do—is a high value for him.

“That’s kind of my market because you are helping people who don’t have options and, secondly, you don’t have much competition,” he said. “Those stories (of helping people) are as important as making a profit.

I’m not so wealthy I can afford to lose money. But if you do what’s right, you’ll be taken care of.”

Technology-enabled Investor Mobility

Technology has enabled even smaller-volume investors like McCormick and Johnson to invest outside of their backyards. All bank-owned (REO) auctions offered on platforms like Auction.com are online, and investors can buy remotely at foreclosure auction in an increasing number of markets.

The increasing opportunity to bid remotely at foreclosure auction is thanks to two key developments in the last several years. First, state law changes have allowed for online bidding in some states. Ohio, where McCormick invests, is one example. Second, Auction.com has continued to expand Remote Bid, a technology launched in 2020 that is now available in more than 1,000 counties nationwide.

“The difference with the remote and the online, you don’t have to drive. You don’t have to go sit around at the courthouse,” Johnson said. “With Remote Bid, I can buy anywhere.”

States Attracting More Mobile Investors

Through the first half of 2024, states attracting the highest share of out­ of-state buyers on Auction.com were South Carolina (75%), Kentucky (73%), West Virginia (73%), Maryland (56%), and Pennsylvania (48%).

However, the absolute share of out-of­ state buyers doesn’t tell the complete story because some states are inherently more conducive to out-of-state buyers when there are major metro areas straddling state lines. The better measure is the change in the share of out-of-state buyers so far in 2024 compared to 2023 (see Figure 1).

States with the biggest percentage increase in out-of-state buyers were South Carolina (up 114%), North Carolina (up 69%), Nevada (up 61%), Kentucky (up 51%), and New Mexico (up 40%).

Other states in the top 10 for the biggest increase in share of out-of-state buyers were Mississippi (up 35%), Tennessee (up 34%), Alabama (up 30%), Montana (up 20%), and Illinois (up 20%). Georgia, where Johnson invests, was No. 11 on the list with an 18% increase.

States With A Declining Share Of Mobile Investors

On the other end of the spectrum are states with a declining share of out-of-state buyers, an indication that geographically flexible buyers more focused on market strength and opportunity are pivoting away from those states (see Figure 2).

States with the biggest percentage decrease in out-of-state buyers so far in 2024 compared to 2023 were Washington (down 62%), New Jersey (down 51%), Michigan (down 48%), California (down 46%), and Idaho (down 40%).
Other states in the top 10 for the biggest decrease in the share of out-of-state buyers were Virginia (down 40%), Indiana (down 35%), Arizona (down 35%), Ohio (down 31%), and Iowa (down 27%).

States with the lowest share of out-of­state buyers so far in 2024—typically markets that have not been attractive to geographically flexible buyers for several years—were California (2% out-of-state buyers so far in 2024), Washington (3%), New York (8%), New Jersey (10%), and Idaho (10%).

Top 25 County Trends

County-level data provides even more precise insight into which local markets are most attractive and least attractive to geographically flexible real estate investors. At the county level, it’s beneficial to look at the share of buyers who live outside the county, not outside the state. Those buyers still typically represent geographically flexible investors, given the median land area for a U.S. county is 622 square miles.

Among the top 25 counties for auction sales volume so far in 2024, a little more than half (13) saw an increase in the share of out-of-county buyers, and a little less than half (12) saw a decrease in the share of out-of-county buyers.
Those with the biggest increase in the share of out-of-county buyers were Sacramento, California (up 196%); Suffolk County (Long Island), New York (up 108%); Shelby County (Memphis), Tennessee (up 106%); Clark County (Las Vegas), Nevada (up 93%); and Los Angeles County, California (up 73%).

The increase in California counties may be somewhat surprising given that only 2% of California property buyers on Auction.com are from out of state. But some California markets are attracting more geographically flexible investors, mostly from other markets within California. For instance, in Sacramento, California, 59% of out-of-county buyers are from Los Angeles County in southern California while a combined 18% are from the Bay Area counties of Alameda, Contra Costa, and Santa Clara.

The story is different in middle-America markets like Shelby County/Memphis, Tennessee, which attracted out-of-county investors from Broward County, Florida, and Alameda County, California—along with investors from across the border in Desoto County, Mississippi, and about an hour northwest on Interstate 40 in Madison County, Tennessee.

On the other hand, county-level markets that lost traction with geographically flexible investors in the first half of 2024 (see Figure 3) were led by Cook County (Chicago), Illinois, where the share of out-of-county buyers was down 49%, followed by Maricopa County (Phoenix), Arizona (down 48%); Tarrant County (Fort Worth), Texas (down 39%); Fort Bend County (Houston area), Texas (down 39%); and Dekalb County (Atlanta area), Georgia (down 32%).