A lot can change in a decade, and housing market strategy is no exception.
Still, investing in the real estate market is just as popular as ever, according to the Realtor.com® investor’s report from June 2025. It found that 13% of homes purchased in 2024 were purchased by an investor, with investor purchases picking up from about 608,000 in 2023 to 610,000 in 2024.
In 2012, Warren Buffett—arguably the most recognizable investor of all time—suggested that investing in “distressed” homes could be one of the most attractive opportunities available. But given the volatility of the market, do experts still agree with his assessment today?
Buffett’s advice to young investors: Go all in on ‘distressed’ real estate
During an episode of CNBC’s “Ask Warren” Squawk Box special in 2012, host Becky Quick asked Buffett to weigh in on the best money move for young investors.
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“If you are a young individual investor at home and you have your choice between buying your first home or investing in stocks, where would you tell someone is the better bet?” she asked.
Buffett was quick to suggest real estate, given that, at the time, homes prices had bottomed out after the 2008 crash.
“If I knew where I was going to want to live the next five or 10 years, I would buy a home and I’d finance it with a 30-year mortgage, and it’s a terrific deal,” he said.
“If I was an investor that was a handy type, which I’m not, and I could buy a couple of them at distressed prices and find renters … it’s a leveraged way of owning a very cheap asset now, and I think that’s probably as attractive an investment as you can make now.”
Renting out homes is still very attractive
While a lot has changed, Buffett is still right about one thing: Renting out a home is still very attractive.
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With mortgage interest rates still riding high and inventory still hard to come by, many Americans have settled into the idea that owning a home will need to sit squarely on the back burner—so instead, they are choosing to rent one.
Realtor.com senior economist Jake Krimmel recently analyzed data from the latest American Community Survey between 2018–23 and found that the rise in suburban rentals could be seen in metros that saw a boom in new construction, such as Austin, TX, Nashville, TN, and Denver, as well as in cities with low construction rates, among them Boston, Philadelphia, and Washington, DC.
“The suburbs boomed during and after the [COVID-19] pandemic,” Krimmel explains. “People want more space, and the large generation of millennials are beginning to settle down and start families.”
And in those suburban areas with good schools, proximity to jobs, and outdoor amenities, the demand for rental homes has exploded, since the price of homeownership is out of reach.
Is the risk worth the reward?
And yet, while demand for a home to rent is high, the question becomes whether investors still have the same opportunity they had 10 years ago to capitalize on it.
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Families sure don’t.
“Buying a home in 2012 was a really smart move. Because home prices hadn’t yet recovered from post-2008 drops, the affordability index per the National Association of Realtors® averaged over 195 for the calendar year,” explains Danielle Hale, chief economist of Realtor.com.
“In other words, the median-income family earned 1.95 times the amount of money needed to buy the median-priced home sold nationwide. In a sign of how much things have shifted, in 2024, that affordability figure was 98. Put simply, in 2024, the median family did not earn enough to qualify to buy the median home sold.”
Hence why they want to rent. However, while distressed properties could still deliver strong returns when carefully sourced and managed, they are no longer among the easiest or most reliable investment options to find.
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That’s why, to make Buffett’s strategy work, you’ll need to get creative. For example, in the second quarter of 2025, of the 7,329 pre-foreclosure properties that entered the market, 3.3% were “zombie” properties, meaning they had been abandoned by their owners and sat vacant during the foreclosure process, according to a recent report from real estate analytics firm ATTOM.
If you can find one of these properties, either through public records or scouting neglected neighborhoods, you might be able to strike a lucrative deal with the owner—who more than likely believe the bank has already taken over the property. But in this case, “distressed” might be a generous word for the condition of the home. And if that’s the case, you’ll want to be careful not to underestimate repair costs and overestimate rent growth—historically dangerous assumptions if rent growth slows or loan rates rise.
It will all boil down to the deal you’re able to get at the outset—and to be frank, that’s more than half the battle.