It’s a hard time to be a prospective homebuyer in Ohio and across the country. Home prices have barely declined in the last year, as interest rates have stayed steady.
On top of that, a recent report from the Federal Reserve Bank of Cleveland shows that buyers are increasingly competing to buy single family homes with large investment companies – sometimes out-of-state LLCs, far from the homes they own.
“We keep hearing comments about investor-owned properties impacting housing affordability, investors purchasing homes that are in competition with families buying homes because they have cash … I wanted to take a look at those questions,” Matt Klesta with the Federal Reserve Bank of Cleveland said in an interview with The Ohio Newsroom last week.
He found that, in some Ohio neighborhoods, as many as 33% of single family homes were owned by investors.
Where is this playing out?
Klesta reviewed single family home purchases in housing hotspots across Ohio’s six most populous counties and in one Pennsylvania county from 2018 to 2024. Overall, he found that the number of investor-owned properties has increased by nearly two percentage points in the seven year time period.
These investors have clustered in poorer communities. More than three quarters of investor hotspot areas identified were considered low or middle income neighborhoods and the majority of residents were nonwhite.
“The home values are lower, rents are lower, [and] rental burden tends to be higher in these neighborhoods,” he said.
Summit, Franklin and Cuyahoga counties had the highest percentage of investor-owned homes – with at least a quarter of single family homes owned by investors in high activity areas.
Who’s buying these homes?
Klesta also found the number of investors outside of Ohio has grown, too. Out-of-state investors accounted for 16% of all investor-owned single family homes in 2024, an increase of 3.3 percentage points from 2018.
Lucas and Cuyahoga counties, in particular, saw more non-Ohio companies buying properties.
In Lucas County alone, more than half of recent purchases in hot spot census tracts were by out of state investors.
“That translates into greater out of state ownership,” he said. “For instance, in Lucas County, about 27% of investor-owned single family homes are owned by out-of-state [investors]. And that increased 11 percentage points from 2018.”
Why does it matter?
Regardless of whether or not they’re Ohio-owned, Klesta said prospective homebuyers often find it difficult to compete with investment firms, especially as many of them use cash to buy property.
He found that nearly 60% of investors used cash last year to purchase single family homes.
“Although investors’ use of cash is decreasing, it remains their most common method of purchasing SFHs [single family homes] and is appealing to sellers, as sellers do not have to wait for the bank to make the mortgage, speeding up the closing process and reducing the risk of a deal falling through,” the study reads.
In addition, many property owners worry over the quality that houses are kept in, compared to owner-occupied housing.
Klesta looked at how often investors are pulling housing permits, an indicator that home improvement is being done, compared to occupants. He said in most cities, investment companies pulled permits at a greater rate within six months – which Klesta said tracks with research showing that investors tend to buy older properties.
But, Toledo and Cleveland proved to be two notable exceptions.
“Kind of the interesting correlation there – even though correlation doesn't imply causation – those are also the two counties that had the highest share of out-of-state investor activity,” he said. “That definitely warrants a closer look.”
