Redfin Reports Investor Home Purchases Plateau But Remain Well Above Pre-Pandemic Levels
(NASDAQ: RDFN) — Real estate investors purchased 87,500 U.S. homes in the second quarter, up 11% quarter over quarter and 5.9% year over year, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. That’s down from the all-time high of 93,700 in the third quarter of 2021, the height of the pandemic-driven homebuying frenzy. Still, investors are buying far more homes than they were before the pandemic; they purchased roughly 60,000 homes per quarter in 2019.
Investor market share has also started to level off but remains above pre-pandemic levels. Investors bought 19.4% of homes that sold in the second quarter, down slightly from a record 20.1% in the first quarter, the first drop after nearly two straight years of increases. But it’s up from 16.2% a year earlier and roughly 15% per quarter in 2019.
In dollar terms, investors purchased a record $60.1 billion worth of real estate in the second quarter, up from $50.5 billion in the first quarter and $54.5 billion a year earlier.
“The cooldown in the overall housing market motivates some investors and scares others off,” said Redfin Senior Economist Sheharyar Bokhari. “Investors are contending with sky-high home prices, just like other buyers. Those who plan to turn homes into rentals are still in the market because high rental payments help offset the cost of the home, and the home will likely grow in value over time. Others are motivated by discounts from home builders looking to sell off extra inventory as individual buyers pull back. But investors in the flipping business have quicker turnaround times, so they’re shying away because the prospect of falling home prices means they may lose money when they relist in six months or a year.”
“Investor purchases probably won’t bounce back to 2021 levels, but they’ll likely remain more common than before the pandemic because the housing market is stable compared with today’s volatile stock market. Those who buy properties as rentals will still cash in, with high demand and vacancies near record lows,” Bokhari continued. “But investors will be less of a roadblock for regular buyers as the housing-market slowdown reduces competition. Investors and individual buyers who can afford to purchase homes have a leg up because other prospective buyers have been priced out.”