Real estate investors are increasingly turning their attention to affordable Midwest cities, acquiring properties at significant discounts compared to typical homebuyers. In some markets, particularly Detroit, investors are paying nearly 60% less for homes, signaling a strategic shift towards lower-priced housing stock with strong rental income potential.
This trend is reshaping local housing markets as small-scale investors, in particular, gain a stronger foothold. While overall investor activity has moderated from its pandemic-era peak, their market share is growing in areas where housing affordability remains a major challenge for the average buyer.
Key Takeaways
- Investors in Detroit are purchasing homes for a typical price 58% below what individual homebuyers pay.
- Other Midwest cities like Pittsburgh, Baltimore, and Cleveland also offer investors discounts of over 50%.
- Small investors now dominate the market, accounting for 62.7% of all investor purchases in the second quarter of 2025.
- States like Missouri, Mississippi, and Nevada are seeing the highest share of investor-bought homes due to affordability and stable rental markets.
The Motor City's Investment Boom
Detroit has emerged as a prime destination for real estate investors seeking maximum value. The typical landlord in the city is acquiring property for 58% less than a regular homebuyer, a staggering discount that highlights a focus on the lower end of the market.
With a median list price of $268,000 in October, Detroit remains one of the most affordable large metropolitan areas in the United States. This price point, which is more than $156,000 below the national median, creates a fertile ground for investment.
Erica Collica Swink, an associate broker with Detroit-Max Broock Realtors, notes that the city's affordability is a major draw. She describes Detroit as being in a "transformation-recovery" stage, which presents significant opportunities.
"Home prices in Detroit are significantly more affordable when compared to other cities across the country, which is very attractive to investors," Swink explained. "We are still in a ‘transformation-recovery’ stage where there is a ton of opportunity."
According to Swink, investors are often better positioned to purchase and renovate properties that need significant repairs—work that many individual buyers cannot afford to undertake. She believes this activity benefits the city by improving housing stock without displacing potential homeowners, given Detroit's large physical size of 139 square miles.
Midwest Investor Discounts
Investors are finding significant bargains across the Heartland, paying far less than the median sales price:
- Detroit, MI: 58% discount
- Pittsburgh, PA: 52.7% discount
- Baltimore, MD: 52% discount
- Cleveland, OH: 51.4% discount
- Milwaukee, WI: 50.1% discount
Beyond Detroit: The Heartland Appeal
The trend of deep investor discounts extends beyond Detroit to several other Midwestern hubs. In Pittsburgh, investors spent a typical price of just $115,000 on a home, a 52.7% discount from the area's median sales price of $252,000. In fact, Pittsburgh had the lowest median list price among the top 50 U.S. metros in October, at $250,000.
Baltimore, Cleveland, and Milwaukee have also become hotspots, with investors securing properties for discounts of 52%, 51.4%, and 50.1%, respectively. This pattern reveals a clear strategy among investors.
Hannah Jones, a senior economic research analyst at Realtor.com, said the data points to a specific investment thesis. "These discounts show that investors are targeting lower-priced homes and entry-level stock, which often provide the best rent-to-price ratios and long-term income potential," Jones stated.
By focusing on more affordable properties, investors can generate stronger cash flow from rental income relative to their initial purchase price, a key metric for long-term success in real estate.
Small Investors Take the Lead
A notable shift is occurring within the investor landscape itself. While large institutional buyers are pulling back, smaller, independent investors are stepping in to fill the void. In the second quarter of 2025, small investors were responsible for 62.7% of all investor home purchases—the second-highest share recorded since 2007.
In contrast, the activity of large investors fell to just 20.1% of the market. This suggests that the current economic climate, characterized by tight housing inventory and affordability challenges, favors individuals and smaller firms who can be more nimble in identifying opportunities.
Top States for Investor Activity
In the second quarter of 2025, investors purchased the largest share of homes in states that balance affordability with resilient rental markets:
- Missouri: 18.9% of homes sold
- Mississippi: 17.1%
- Nevada: 15.4%
- Indiana: 14.3%
- Alabama: 13.4%
A Different Strategy in Las Vegas
While the Midwest is defined by deep discounts, other markets like Las Vegas are attracting investors for different reasons. Nevada saw 15.4% of its homes purchased by investors, drawn by a landlord-friendly environment that includes no state income tax and low property taxes.
Tania Jhayem, a real estate agent and investment specialist with Urban Nest in Las Vegas, confirmed that Nevada remains a "huge draw" for smaller and independent investors. She pointed to market normalization as a key factor creating new opportunities.
"We still have a relatively strong rental market, but we’re seeing early signs of normalization: more available homes, slightly longer days on market, and landlords needing to be more competitive with pricing," Jhayem said.
She has observed a recent trend of investors buying properties with the intent to rent for long-term stability rather than flipping for a quick profit. This approach suggests a focus on sustainable income streams over speculative gains.
Jhayem concluded that investor presence has been a net positive for the Las Vegas market. "It keeps the market moving, helps revitalize older properties, and adds much-needed rental inventory," she noted, highlighting the role investors play in maintaining market liquidity and improving the housing supply.
