AUSTIN — Investors purchased a record share of Dallas-area homes last year.

And these for-profit homebuyers are expected to continue to gobble up thousands of houses in North Texas and nationwide.

Home investors are having the biggest impact in the lower price ranges of the Dallas home market — the same sector first-time buyers are shopping.

More than 14% of low-priced houses in the Dallas area sold to investors in 2018, according to new data by CoreLogic. Overall, more than 8% of Dallas homes of all prices were snapped up by investors.

"Investor buying activity in the U.S. is at record highs," CoreLogic's Ralph McLaughlin said. "It's not the big institutional guys that are leading the increase in home buying — it's the smaller guys.

"They are buying homes that are in the lower third of prices — they are essentially buying starter homes," McLaughin said at a meeting of the National Association of Real Estate Editors in Austin.

Source: CoreLogic (CoreLogic)

Small investors accounted for more than 60% of these home buys last year.

CoreLogic found that by the end of 2018, the investment rate in the U.S. housing market reached 11.3%, the highest rate since 1999, when the researchers started keeping this data.

The share of investor home buys in the U.S. and the Dallas area is even higher than during the Great Recession, when thousands of distressed homes hit the market and were sold to owners who converted them to rental properties.

That's still what's happening with most of the houses sold to these buyers.

"Most investors are investing east of the Mississippi," McLaughlin said. "Places investors are not buying homes at such high rates are in the West.

"California markets have a realtively low share of homes being purchased by investors."

U.S. markets with the highest home investment purchase rates last year include Detroit (27%), Philadelphia (23.3%) and Memphis (19.7%), according to CoreLogic.

"Homebuyers today are more likely to cross paths with investors during an open house than at any other time in the past two decades," McLaughlin said.

David Hicks, who heads Dallas-based HomeVestors of America, said his company, which mostly represents small investors, is seeing record business.

He said HomeVestors buyers are on track to purchase 16,000 to 17,000 homes across the U.S. in 2019. "We are buying the lower end — small houses," Hicks said.

The houses that HomeVestors' members purchase through franchises around the country are mostly under 1,400 square feet and were built in 1985 or earlier. "Our average age is 1960," Hicks said.

Most of the properties need repairs and updating. "People don't call HomeVestors if they have a nice house," he said. The buyers spend an average of $20,000 a rooftop before reselling the homes or offering them as rentals.

The average North Texas property-flipper made a profit of $30,588 in the first quarter of this year, according to the latest estimate from Attom Data Solutions.

While the home investment business is booming, Hicks said he worries about some of the deals he sees in markets where home costs have risen.

"A lot of investors are getting in buying houses who don't understand the economics," he said. "We see the prices they are paying and the numbers don't work.

"It's not a get-rich scheme — they work hard."

Hicks said if there is a housing slowdown and prices decline, some small investors who bought a few properties and paid too much could be hurt.

"Right now there is a lot of money for properties," he said. "There is more money than there has been in years."

Colin Wiel, cofounder of California-based home management firm Mynd Property Management, said the increase in rental homes is meeting a need in the market.

"For many people, owning a home is the albatross around their neck that holds them down in life," Wiel said. "I think there is fundamental change for the long term in homeownership.

"Today a young person is going to have 10 to 15 jobs throughout an entire career, and job mobility is very important," he said. "The millennial generation is very much aware of this. Homeownership is a burden as much as a benefit."

Wiel said that the U.S. home rental market is a huge, behind-the-scenes business.

"It's twice as big as the hotel industry by revenue — about $460 billion a year," he said. "About $29 billion is collected by third-party property management companies in fees."