California Coastal Markets Outdone in Investor Interest

Coastal California might be one of the country’s most desirable locations to buy a home, but investors in the Golden State are fleeing inland in search of deals.

From the beginning of 2024 through this June, seven of California’s 10 biggest increases in investor share of homebuyers were far away from the ocean, the Orange County Register reported, citing data from Cotality, formerly known as CoreLogic.

San Jose and Greater Los Angeles continue to attract investors looking to purchase homes. But several inland cities, many in the Central Valley, saw the fastest increases in investor activity in that year-and-a-half period.

In third place is Hanford in the Central Valley, which saw 34 percent investor share of homebuying in the 18-month period compared to 16 percent from 2015 to 2023. Fresno, less than an hour north, witnessed 36 percent of home sales go to investors, contrasting 20 percent over the previous nine years.

Visalia, another Central Valley city not far from Hanford, came in at number five with 35 percent investor interest versus 19 percent from 2015 to 2023. It was followed by Merced with 36 percent, up from 21 percent in the 2015 to 2023 period; Modesto in eighth place at 34 percent compared to 19 percent previously; Stockton with 34 percent investor purchases versus 20 percent in the preceding nine years; and Bakersfield rounding out the top 10 with 32 percent of homebuyers being investors compared to 18 percent from 2015 to 2023.

Affordability was the likely driver in the uptick in investor interest, according to California Association of Realtors data cited by the Register. In 20 counties spanning Southern California, the Bay Area and the Central Coast, about 17 percent of households could afford to buy a home this spring, down from 21 percent four years prior. In 33 other counties outside those markets, median affordability was higher at 29 percent, though it was also a decrease from 39 percent in 2021.

Overall, investors made 33 percent of home purchases in California in the 18-month period ending in June, up from 21 percent in the nine-year period ending in 2023. The 12 inland metro areas saw the biggest jump among the state’s three core markets, bringing in a median 32 percent investor share of homebuyers versus 19 percent in the previous nine years. By comparison, investor purchases in Southern California increased 11 points to 36 percent in the same period, while it was up 10 points to 34 percent in the Bay Area.

— Chris Malone Méndez