In 2021, institutional real estate investors accounted for about 9.3% of all home sales. That was a sharp increase from 5% in 2020. Although the rate leveled off after 2021, it held steady at 6.6% in both 2024 and 2025.
In fact, that steady rate signals something important. Institutional investors still believe there are strong profits to be made — as long as they invest in the right metros.
Furthermore, thanks to recent year-end reports and other timely data releases, real estate professionals now have clarity on which metropolitan areas are attracting investors. Just as importantly, the data also shows the metros that may not be sound investments in 2026.
Methodology
To compile this list, we combined data from ATTOM Data Solutions, Redfin, and the National Association of Realtors. Our goal was to identify the five hottest and five coolest markets for institutional investor purchases.
Specifically, the hottest markets use complete 2025 annual data. The coolest markets use Q3 2025 figures, which represent the latest information available at the time of publication. Both lists cover the nation’s 133 most-populous metros.
Top 5 markets for institutional investor sales in 2025
As expected, all five metros with the highest percentage of institutional investor purchases in 2025 are in the Sun Belt. This region has seen strong population and economic growth over the past several years.
Nearly 15% of Memphis’s 2025 home sales went to institutional investors — the nation’s highest rate of any major metro. Nashville surpassed Memphis to become Tennessee’s most populous city back in 2017. As a result, investors have continued to take advantage of Memphis’s affordable listings and high inventory levels.
The Rocket City is now Alabama’s largest metro, having surpassed Birmingham’s population in the early 2020s. The area has a highly transient and educated population, which drives consistent rental demand.
Similarly to Huntsville, Fayetteville has a transient population driven by Fort Liberty. Low entry prices continue to attract institutional investors to this eastern North Carolina market.
Alabama’s former largest metro saw nearly the same investor rate as Huntsville. Those investments already appear to be paying off — the Birmingham-Hoover area recorded the highest median home price increase of any major metro in 2025, at 12.3%.
The Dallas-Fort Worth metro remains one of the most attractive destinations for both homebuyers and investors. Strong, steady job growth continues to fuel consistent demand across the region.
5 metros where investors are pulling back
Even as the Sun Belt real estate market remains strong overall, a few pockets have softened for sellers. Tn contrast, the following metros recorded the sharpest year-over-year decreases in institutional investor home sales from Q3 2024 to Q3 2025.
After years of a red-hot real estate market, Las Vegas and the surrounding Clark County area now show signs of coming back to balance. The Las Vegas market has always been volatile because of its tourist-driven economy. More investors now appear to be cashing out and stepping back from the market.
Similarly, the story holds in Florida. Homebuyers flooded into the state during the early pandemic years. As companies instituted back-to-work policies, that growth slowed. The market now shows signs of stabilizing.
Even so, Florida’s largest metro is not immune to the regional correction. Many investors now recognize that profit margins are no longer what they were in 2021 and 2022. The 14% drop in investor activity reflects that shift.
Typically a stable market, Denver has seen median home prices gradually decline over recent years. Buyers now hold more leverage, and investor activity has followed the same downward trend.
Finally, Charlotte’s investor pullback broadly mirrors national trends. Sellers in the Queen City face a growing supply of new homes and apartments, which has softened the market for investors who previously benefited from tight inventory.
What to watch when targeting profitable metros
However, even as the national real estate market continues to shift in buyers’ favor, investors have plenty of opportunities to make strong profits in the right metros. That said, choosing the right market requires looking beyond the headline numbers.
In particular, here are the factors that professional investors consistently monitor before committing capital to a market:
- Disaster-prone areas — flood zones, wildfire risk, and hurricane exposure all affect insurance costs and long-term property values
- Metros with strong job growth — employment trends drive population growth, rental demand, and long-term price appreciation
- Up-to-date property record search — ownership history, liens, and distress signals can reveal opportunities others overlook
- Residential construction data — a pipeline of new supply can cap appreciation in markets that otherwise look attractive
- Metro crime rates — neighborhood safety affects both rental demand and resale values at the property level
Remember: Real estate trends do not last forever. The pandemic-era seller’s market was always going to correct. Smart investors who keep up with current data and investigate neighborhoods thoroughly are best positioned to find the next wave of profitable markets in 2026.
Frequently asked questions
The top five metros for institutional investor purchases in 2025 are Memphis, TN (14.8%), Huntsville, AL (11.9%), Fayetteville, NC (11.4%), Birmingham, AL (11.2%), and Dallas, TX (11.1%). All five are in the Sun Belt, which continues to attract investors due to affordable entry prices, population growth, and strong rental demand.
The five metros with the sharpest year-over-year declines in institutional investor activity in Q3 2025 are Las Vegas, NV (-20%), Orlando, FL (-18%), Miami–Fort Lauderdale, FL (-14%), Denver, CO (-9%), and Charlotte, NC (-7%). These markets saw rapid price appreciation during 2020–2022 that compressed margins as prices leveled off.
Memphis leads all major metros with 14.8% of 2025 home sales going to institutional investors. The city offers one of the lowest median home prices among major Sun Belt metros at $292,600, combined with high inventory and strong rental demand. These factors make entry costs low and rental yields relatively attractive compared to more expensive markets.
These markets saw explosive growth during 2020–2022 driven by pandemic migration and remote work. As prices peaked and remote work reversed with return-to-office policies, demand softened and inventory increased. Investors who bought at or near peak prices now face compressed margins. The 14–20% drops in investor activity reflect a recalibration toward markets where returns still justify the risk.
Institutional investors accounted for 6.6% of all home sales in both 2024 and 2025. This is down from a peak of 9.3% in 2021 but still well above the pre-pandemic baseline of approximately 5% in 2020. The sustained rate suggests institutional investors remain active in the market, even as they concentrate their purchases in specific high-return metros.
