Investors are piling into real estate as values skyrocket by up to 38%. 13 metros with the highest gains, and 25 that are plunging.

• Mortgage rates stayed high despite rate cuts, attracting cash-heavy investors to the housing market.
• Despite values dropping in some areas, those selling are still raking in gains.

Despite the central bank cutting interest rates, mortgage rates haven't followed suit. The average 30-year term remains near 6.21%.

Still, there was an uptick in buyers during the second quarter, specifically those who are investors, according to the latest data available from Redfin. The share of investors who purchased property rose 3.4% from a year earlier. They were likely attracted by an opportunity to meet the growing demand of renters who face barriers to homeownership that a lack of affordability and elevated mortgage rates have brought on, read the note by Lily Katz.

Home prices nationwide, including those that were distressed sales, increased by 4.3% in July from a year ago, according to CoreLogic. An investor purchased one out of every six properties sold within the second quarter and one of every four low-priced homes for a whopping $43 billion worth of real estate, Katz wrote.

Investors, which the real estate data firm defines as buyers whose ownership code on a purchasing deed includes either association, corporate trustee, company, joint venture, or corporate trust, are less reliant on debt and are not as rate-sensitive as the average buyer. Most, or 69%, pay in cash or make bigger down payments. It means they can take advantage of the lack of competition.

Some of the cities that have seen a rise in investor interest include San Jose, CA, Portland, OR, and Denver, CO. Meanwhile, there has been a drop in purchases in areas like Oakland, CA, and Providence, RI, where median capital gains have plunged by 20% and 37% respectively.

The chart below demonstrates the change in investor purchases over the last two decades. It shows upticks following the housing bubble crash and in the years that followed the pandemic.

But whether they're buying or selling, investors have been doing quite well regarding capital gains, says Elijah de la Campa, a senior economist at Redfin. This was not the case in the years leading up to the housing crisis, where property owners were losing from selling.

"I still see the opportunity for making money on my investments and making a considerable amount of money with 30%, 40% price increases relative to the prior year," de la Campa said. "While things might be more challenging in certain places, overall it looks like there are still lots of opportunities to make money at buying and selling homes as an investor. "

He added that even the cities seeing a retreat in their capital gains from a year ago are still profitable at their sale; they're just not going for as much as they would have last June.

Below is a list of the 39 major metro areas in descending order of median capital gains over the past year into June. What stands out most to de la Campa is that many areas with the highest capital gains are affordable, particularly Philadelphia and Warren, MI.