Homeownership has slipped out of reach for millions of Americans thanks to the astronomical rise in mortgage rates and an ongoing inventory shortage.

Now, there is another obstacle to buying a home: Investors and hedge funds are snatching up properties at the fastest pace in nearly two years, according to new findings published by Redfin.

Real-estate investors bought about 44,000 homes in the first quarter of 2024, up half a percent from the previous year – the first increase since 2022. The gain was primarily driven by an uptick in purchases of single-family homes. 

Although investors are scooping up fewer homes than they did before the pandemic began, they’re still purchasing a “fairly high” share of the homes. In fact, in the first three months of the year, investors bought almost 19% of homes that sold, the highest percentage in nearly two years. That means investors bought just about one in five homes for sale in the three-month period from January to March. 

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“With home prices and rents back on the rise and the initial shock of elevated mortgage rates in the rearview mirror, investors are easing their foot off the brake pedal,” the report said.  

One reason that investors are coming off the sideline is because they are earning more money than they were just one year ago. As of March, the typical home sold by an investor garnered a 55% return, or about $175,000 in profit. That’s up from about a 46% return the previous year and $147,000 in profit. Investors are also more immune to high mortgage rates than the typical individual buyer, because they tend to pay in all cash.

“When home prices got crazy high during the pandemic, investors sold out,” said Connie Durnal, a Dallas Redfin Premier agent. “But several months ago, they started to ramp back up.” 

The analysis found that investors are buying more expensive homes than before the pandemic, with purchases of high-priced homes surging 10.5% in the first quarter when compared with the previous year. The typical home bought by investors in the first quarter cost about $464,560, a more than 9% increase from a year earlier. In total, investors bought up about $31.3 billion worth of real estate in the first quarter.

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However, real estate investors are also snatching up a record share of the most affordable homes in the country, according to the analysis. Low-priced homes represented 47.5% of investor purchases in the first quarter, while high-priced homes accounted for 28.5%. 

“While high-priced homes made up the biggest increase in investor purchases in the first quarter, low-priced homes were still the preferred property type,” the report said. 

Investors are drawn to lower-priced homes for many of the same reasons that individual buyers are: They cost less, which is appealing when both housing prices and borrowing costs remain elevated. However, this means that individuals are often competing with cash-rich investors to buy the same homes.

“Any home that is entry-level is immediately pounced on,” said Brian Connelly, a Redfin Premier agent in Boston. “There’s a mix of first-time homebuyers, investors and second-home buyers all fighting for homes.”

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Many Americans are already struggling to become homeowners amid the spike in housing prices. 

There are a number of driving forces behind the spike in prices. 

Years of underbuilding fueled a shortage of homes in the country, a problem that was later exacerbated by the rapid rise in mortgage rates and expensive construction materials.

Available home supply remains down a stunning 34.3% from the typical amount before the COVID-19 pandemic began in early 2020, according to a separate report published by Realtor.com.

Higher mortgage rates over the past three years have also created a “golden handcuff” effect in the housing market. Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell, limiting supply further and leaving few options for eager would-be buyers.

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While an uptick in the number of home listings in certain markets is a welcome sign that suggests “early signs of normalization,” Fitch said “the pace is being tempered by persistently high mortgage rates and the escalation of home prices.”

Economists predict that mortgage rates will remain elevated in 2024 and that they will only begin to fall once the Federal Reserve starts cutting rates. Even then, rates are unlikely to return to the lows seen during the pandemic. On top of that, investors are growing skeptical about the odds of a Fed rate hike this year given the string of hotter-than-expected inflation reports at the beginning of the year.

Mortgage buyer Freddie Mac said Thursday that the average rate on a 30-year loan last week fell to 7.02%. While that is down from a peak of 7.79% in the fall of 2023, it remains sharply higher than the pandemic-era lows of just 3%.

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Even during a tumultuous economic time, with inflation still sitting well above the Federal Reserve’s target, cruise lines are thriving. 

In the first quarter of the fiscal year, executives across the industry boosted their full-year profit forecasts as they saw record-breaking demand. 

Norwegian Cruise Line reported seeing record bookings, while Carnival noted it is “capturing more new guests than ever before.” 

“The demand for cruise vacations continues to be at an all-time high, as evidenced by record bookings, record book decisions and record advanced ticket sales,” Norwegian CEO Harry Sommer told analysts on an earnings call earlier this month. 

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The company’s advanced ticket sales balance increased 30% year over year, reaching a record $3.8 billion.

The company raised its full-year profit forecast Monday for the second time in the last three weeks as it “continued to see very strong demand and record bookings,” Norwegian CFO Mark Kempa said. 

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Royal Caribbean Cruises CEO Jason Liberty told analysts on the company’s most recent earnings call demand for its “vacation experiences continues to accelerate” even as some prices rose.

Liberty explained that bookings throughout the first quarter, including April, consistently outpaced last year. 

However, “European bookings are outpacing last year’s levels at higher prices,” he said. 

“We see strong demand across all products and markets. North America continues to be extremely robust, where approximately 80% of this year’s guests are sourced,” Liberty said. 

The company raised its annual profit forecast in April. 

Carnival Cruises also raised its annual profit forecast during its first-quarter earnings amid record bookings. 

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The company’s “record book position and activity did not just happen, and it is not the result of pent-up demand for repeat guests built up during the pause, which is now years in the rearview mirror,” CEO Josh Weinstein said. 

“It is because we have been creating more consideration and broad-based demand for cruise travel in all of our source markets across our well-balanced portfolio.” 

Weinstein noted the demand came as prices remained elevated. He noted that prices “ran considerably higher for our peak summer period in (the third quarter), and they were also considerably higher for (the fourth quarter).” 

Travelmation founder Adam Duckworth told FOX Business the demand for cruises has increased significantly in recent years as travelers realize they can get more value with these types of trips. 

“Most cruise lines will include all meals, and they are a one-stop shop to endless entertainment and activities for travelers of all ages,” Duckworth said, adding these types of trips also eliminate the need to drive or fly between cities. 

Though a “more luxury vessel may cost you more than a land vacation,” Duckworth noted that “often times, you get so much value for your money that it truly is a great deal.  Even if you go super luxe, you typically have all meals, drinks, entertainment, excursions and sometimes even flights included.” 

The Points Guy senior cruise writer Ashley Kosciolek agreed that while they are still “commanding some of the highest fares ever, they’re still a great value.” 

“If you were to island hop around the Caribbean or travel from town to town in Alaska, you’d pay quite a bit more to do it on your own than if you cruised to those locations, especially when you consider transportation costs, as well as hotel stays and meals,” Kosciolek noted. 

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Wall Street is eagerly awaiting the latest earnings report Wednesday from Nvidia, which has experienced rapid growth amid the boom in artificial intelligence (AI) technology.

Nvidia has grown to become the third-largest publicly-traded U.S. company by market cap on the strength of its dominance of the AI chip market. Estimates suggest Nvidia’s market share in the highly sought-after AI chips is at least 80%, with demand for the semiconductors used to train AI models continuing to rise. 

The company’s ascent in recent years comes about three decades after its founding, when the AI boom was well beyond the horizon.

Nvidia was founded in 1993 by a trio of electrical engineers — Jensen Huang, Chris Malachowsky and Curtis Priem — who hatched their plan at a Denny’s restaurant in California’s Bay Area. Its initial focus was on making 3D graphics available for video games and multimedia. They viewed the gaming market in particular as a favorable opportunity to both generate revenue and tackle challenging computational problems that could propel future growth.

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A few years after its launch, Nvidia fell on challenging times after a setback in developing the graphics card for the Sega Dreamcast video game platform. It had little financial headroom and laid off over half its employees. 

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Despite the setback, an investment from Sega America CEO Shoichiro Irimajiri gave Nvidia and CEO Huang a lifeline that allowed it to refocus on a new line of graphics products.

The company launched what it called the graphics processing unit (GPU) in 1999, which helped revolutionize the computing industry. Nvidia went public that year, and its stock traded below $1 a share until early 2000. 

In 2006, Nvidia developed the CUDA software platform and API that lets programmers get more computing power out of their GPUs. In the ensuing years, AI research teams began to use large amounts of GPUs to accelerate deep neural networks, which Nvidia refers to as the “big bang of modern AI.”

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The application of GPUs sped up deep learning by a factor of 50 in a three-year span by the end of 2015. At the end of that year, Nvidia’s stock was trading at $8.24 a share, and the company continued to develop more advanced GPUs. Nvidia released its breakthrough RTX GPU in 2018, which propelled the company’s stock above $60 a share.

The next few years saw further advancements in GPUs and AI-enabled chips, which resulted in Nvidia contributing to the creation of the metaverse. Its stock was above $100 a share for all of 2022 and began to soar the following year amid the rise of AI.

Nvidia rolled out its Grace Hopper superchip in 2023, and by the end of the year its stock price was just shy of $500 a share. Further advancements in 2024, including the announcement of Blackwell, the next-generation AI chip that will serve as a successor to Grace Hopper, sent its stock even higher.

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As of Tuesday’s close, Nvidia stock is trading at $953.86 a share, a 232,548% increase from the time of its initial public offering in January 1999. Over the last five years, its stock is up 2,528%. And, over the last year, it has gained nearly 206%. Thus far in 2024, Nvidia’s stock has risen 98%.

Beth Kindig, I/O Fund’s lead tech analyst, told FOX Business Network’s “Making Money With Charles Payne” Nvidia is poised for more success in the near future.

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“This earnings report is one piece, but the ultimate fireworks begin at the end of this year, and that’s because Nvidia is now going to compete with Nvidia,” she said. “They are speeding up their release generation cycle from two years to one year, and they’re doing that to make sure that their next-generation can pry that (capital expenditure) budget and reallocate it to their next generation.

“This is bold. It’s daring for them to speed up that fast. Never been done before. So, by the end of this year, the word is Blackwell.”

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