The percentage of Vermont homes bought by investors more than doubled in 2021, according to data from a company that analyzes property information.

“We saw mortgage rates hit historical lows,” said Selma Hepp, deputy chief economist at California-based CoreLogic. “As a result of that, we saw much more activity from investors.”

Hepp said investors were also attracted by the fact that rents soared by 12% nationwide in 2021. She pointed out that while Vermont had the most dramatic increase in the percentage of investors in the market, investors were buying up properties all across the country.

Before the pandemic, she said, investors represented 15% of home buyers nationwide. That number shot up to 26% at the beginning of this year, she said.

CoreLogic defines investors as buyers who have owned three or more homes simultaneously over the past 10 years. These can be single-family detached homes, townhouses or condominiums. The figures do not distinguish between those who use those properties to generate income through rentals and those who own multiple homes for their own personal use.

For years, investors had a small presence in the Vermont home market — in fact, the lowest in any state — representing only 2% of home buyers until 2016.

In 2017, that number climbed to 3%, then to 5% in 2018 and 7% in 2019 and 2020. But in 2021, the number jumped to 17% of the 13,999 homes sold, the largest relative increase for any state.

To be sure, investors still represented a smaller percentage of Vermont home purchases compared to other states. Investors accounted for 30% of home purchases in Nevada in 2021, for example.

Hepp said investors in Vermont were more attracted to expensive homes, homes that sold for more than 125% of the median price. She said they bought 25% of Vermont homes in that price range in 2021.

“Investors tend to go to areas that are already in demand, areas that already see a higher rate of home price growth or rent growth,” Hepp said.

She said Bennington County saw the biggest jump in investor activity in Vermont. Investors represented 25% of home purchases in the county in the first quarter, she said.

Lilli West, a real estate agent in Bennington, said a lot of investors were drawn by the low interest rates.

“At 3%, it was a no-brainer for a lot of investors to buy a second home,” West said. “Bennington in the last few years has been booming.”

The revitalization of downtown Bennington, the ability to work from home and upgrades to broadband service have drawn home buyers in general and investors have followed, she said.

She cites a Bennington College alumnus who retired, moved back to the area and bought the Blue Benn Diner.

“So it’s neat to see the kinds of investors that are coming in,” West said. She said she knows several young investors who have full-time jobs and are buying multiple-unit properties.

She said the last two years have seen so much investment from cash buyers and buyers able to make large down payments that people who rely on Federal Housing Administration, Veterans Administration or other government-backed loans to buy a primary home have not been able to compete.

“If you have four or five offers in your hand, you’re going to pick the high down payment because it’s low risk,” West said.

That leaves people with job offers unable to buy homes, she said.

“I know several people who had job offers who would have moved here but they couldn’t find the right house,” West said. “They put offers on 10 properties and got outbid each time.”

Another draw for investors, West said, is that there is a “huge demand” for rentals.

That includes short-term rentals. West said the Manchester and Dorset areas have a “huge amount” of secondary homes being used for short-term rentals. Data from AirDNA shows 185 active short-term rentals in Manchester Center, 56 in Dorset and 25 in East Dorset.

West herself is an investor. On Friday, the day she spoke to VTDigger, she was closing on the purchase of Maple Leaf Realty, the 14-agent real estate agency where she works, as well as the building and the building out back, which she will rent out.

In the Burlington area, Realtor David Parsons also sees what he calls “hybrid investors”.

“Some of those folks are buying what would be considered second homes at one point, but are also using those as investment properties primarily through short-term rental platforms,” Parsons said. “So they’re purchasing those properties for their own use in some ways, but I don’t think that they would be making those purchases unless they had the income generation potential provided by those short-term rental outlets.”

Parsons said these are people whose primary jobs are in major metropolitan areas who can work remotely some of the time.

Things changed dramatically in the second quarter of this year as interest rates rose, both in Vermont and nationwide. Hepp said investors in Vermont now represent 7% of homes bought — the same percentage as before the pandemic.

“Whether it’s the higher cost of borrowing or the perception that we are now entering a recession and home prices may slow down significantly or decline, investors really pulled out of the market at this point,” Hepp said.

But in Bennington, West has not seen a slowdown.

“Last month, I listed three first-time-home-buyer homes, cute little homes less than 2,000 square feet on a small lot, between 225 and 250 (thousand dollars), and I got four offers on one, five offers on one and six offers on the other,” West said. “All of them sold over asking.”

At that price, she said, given the cost of construction labor and materials, existing homes are still cheaper than the $400,000 it would cost to buy land and build a basic ranch home.