Redfin Reports Investor Home Purchases Rise for the First Time in Nearly Two Years

(NASDAQ: RDFN) — Real estate investors bought roughly 44,000 U.S. homes in the first quarter of 2024, up 0.5% from a year earlier—the first increase since the second quarter of 2022. That is according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Investor activity in the housing market is stabilizing following several years of dramatic ups and downs. Investor home purchases more than doubled during the pandemic homebuying boom in 2021, and then plunged nearly 50% at the start of last year as declining rents and home values ate into potential profits. But now, with home prices and rents back on the rise and the initial shock of elevated mortgage rates in the rearview mirror, investors are easing their foot off the brake pedal.

Investors are making more money than before: Investors are reaping bigger profits than they were a year ago. The typical home sold by an investor in March went for 55.2% more ($174,616) than the investor bought it for. That’s up from 46.3% ($146,586) a year earlier. Just 5.3% of homes sold by investors sold for a loss, down from 13.7% in March 2023.

Investor purchases also hit a low point in the first quarter of 2023—part of the reason they’re now rising on a year-over-year basis.

Investors are buying up the biggest chunk of U.S. homes in almost two years: While investors are purchasing fewer homes than they were before and during the pandemic housing frenzy—a result of today’s relatively slow market—they’re still purchasing a fairly high share of the homes. They bought 18.7% of U.S. homes that sold in the first quarter, up from 17.9% a year earlier and the highest percentage in almost two years.

Investors have seen their market share tick up because they’ve come off the sidelines faster than individual buyers; overall U.S. home purchases fell 3.9% from a year earlier in the first quarter as elevated mortgage rates deterred buyers (though it’s worth noting that’s the smallest growth in two years). Investors are less sensitive to mortgage rate fluctuations than regular buyers because most of them (69%) pay in cash, though they’re still somewhat sensitive because they often take out different loans to cover home flipping and other expenses.