Redfin: Investor Purchases Plateau

(Image courtesy of Redfin; Breakout image courtesy of Tima Miroshnichenko/pexels.com)

Investor home purchases are now around pre-pandemic levels, reported Redfin, Seattle.

The number of homes purchased by investors fell 2.3% year-over-year in the third quarter.

That follows four years of dramatic swings in investor purchases, with numbers soaring as high as 144% year-over-year in 2021, then nearly 50% drops at points last year.

“Investors are finding a balance after several years of whiplash: They bought up homes at a frenzied pace in 2021 and the beginning of 2022, then quickly backed off when the housing market slowed as mortgage rates rose,” said Redfin Senior Economist Sheharyar Bokhari. “Now there’s a middle ground. It’s less appealing to buy homes to flip or rent out than it was at the start of the pandemic, when demand from both homebuyers and renters was robust. But it’s more appealing than it was last year, when soaring home prices and borrowing costs put a big damper on demand.”

Redfin defines as an investor any institution or business that purchases residential real estate–including both institutional and small mom-and-pop investors.

Investor purchases overall are now sitting around a pre-pandemic level of 50,000 per quarter, with typical seasonal variation.

Investors purchased $38.8 billion in homes in the third quarter, up 3.4% year-over-year and near parallel to increases in home-sale prices.

In September, 8.3% of listing were from investors, down from 8.7% a year earlier and slightly above the pre-pandemic numbers.

Investors bought 15.9% of homes that sold in the third quarter–the lowest share since 2020 and down from 16.2% in Q3 2023. However, it’s also much closer to those pre-pandemic norms–in Q3 2018 and 2019, investors bought about 14% of homes. The record high of 20.9% was hit at the start of 2022.

Investor purchases of condos fell 11.4% year-over-year, the biggest decline in a year.

The declines for other types of properties were more muted–3.5% for townhouses and 2.1% for multifamily properties. Single-family homes saw an uptick of 0.5%.

Single-family homes also made up 69.9% of investor purchases, up from 68% in Q3 2023. Condos were 18.2% of the purchases, compared with last year’s 20.1%. Townhomes were 6.7% and multi-family properties were 5.2%, both flat from Q3 2023.

Low-priced homes made up 45.7% of investor purchases; 30.4% were high-priced and 23.9% were mid-priced.