Redfin Reports Investor Home Purchases Rise for the First Time in Nearly Two Years
Real estate investors bought 19% of
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 (
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
Investors have seen their market share tick up because they’ve come off the sidelines faster than individual buyers; overall
“Investor activity is steady,” said
Investors Are Buying More Single-Family Homes Than Before
Investor purchases of single family homes rose 3.9% year over year in the first quarter, the first increase in nearly two years. Meanwhile, investor purchases of townhouses, condos/co-ops and multifamily properties fell 8.6%, 6.4% and 2.5%, respectively. Investors are likely keen on single-family properties because that segment of the market has posted relatively strong rent growth—AKA has stronger ROI potential—and also has lower tenant turnover.
Investors and individual buyers who are in the market to buy a home are often duking it over the same properties, according to Redfin agents. And in some cases, investors are losing.
“The balance of power between investors and regular buyers is changing,” said
Single-family homes represented 68.9% of investor purchases in the first quarter—the highest percentage since mid-2022. Meanwhile, condos/co-ops represented 18.7%, townhouses made up 7.2% and multifamily properties made up 5.3%—all down from a year earlier.
Investors have also gained market share in the single-family segment; 18.4% of
Investors Are Buying More Expensive Homes Than Before
Investor purchases of high-priced homes jumped 10.5% year over year in the first quarter—the first increase in nearly two years. Meanwhile, investor purchases of mid-priced homes rose 4.7% (also the first increase in nearly two years), and investor purchases of low-priced homes fell 6.5%.
The typical home bought by investors in the first quarter cost
Investor purchases of high-priced homes are on the rise in part because investors are buying more single-family homes, which tend to be more expensive than condos and townhouses. But they’re also on the rise because investors have been buying more homes in expensive
But Investors Are Also Buying a Record 26% of America’s
While high-priced homes made up the biggest increase in investor purchases in the first quarter, low-priced homes were still the preferred property type. Low-priced homes represented 47.5% of investor purchases in the first quarter, while high-priced homes represented 28.5% and mid-priced homes represented 24%. Investors also have a relatively high market share in the affordable market. They bought a record 26.1% of low-priced
Investors are drawn to affordable homes for the same reason homebuyers are: They cost less, which is especially attractive when home prices and borrowing costs remain elevated. And when housing affordability is this strained, there could be more potential for value increases in the lower price tier, meaning more potential for building equity.
“Any home that is entry-level is immediately pounced on,” said
Investor Home Purchases Are Soaring in
In
The aforementioned metros also saw among the largest increases in overall home purchases in the first quarter. The Bay Area’s housing market has been bouncing back after slowing substantially during the pandemic. People aren't moving out at the pace they were before, and
Investor home purchases fell fastest in relatively affordable markets in the Midwest and on the
Other Metro-Level Highlights
Where investors bought the highest/lowest share of homes that sold: Q1 2024
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Highest share: In
Miami , investors bought 30.6% of homes that sold. Next cameCleveland (24.6%),Jacksonville, FL (24.5%),San Diego (23.6%) andSan Francisco (23.4%). -
Lowest share:
Providence, RI (10.5%),Montgomery County, PA (10.8%),Warren, MI (11.3%),Washington, D.C. (11.7%) andSeattle (11.7%).
Where the share of homes bought by investors increased/decreased most from a year earlier: Q1 2024
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Biggest increases: In Oakland, investors bought 16.9% of homes that sold, up 2.9 percentage points from a year earlier. Next came
Las Vegas (2.7 ppts),Tampa, FL (2.6 ppts),Phoenix (2.5 ppts) andRiverside, CA (2.4 ppts). -
Biggest decreases:
Cincinnati (-3.1 ppts),Baltimore (-2.6 ppts),Chicago (-1.6 ppts), Providence (-1.1 ppts) andSeattle (-1.1 ppts).
Where investors had the largest median capital gains:
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In
Philadelphia , the typical home sold by an investor sold for 136.2% more than the investor bought it for. Next cameCincinnati (120%),Virginia Beach (97%),Newark, NJ (96.6%) andColumbus, OH (94.3%). -
In
San Francisco , the typical home sold by an investor sold for 28.7% more than the investor bought it for. It was followed byPhoenix (34.4%),Las Vegas (37%),Sacramento (39.5%) andDenver (42.5%).
To view the full report, including charts, methodology and additional metro-level data, please visit: https://www.redfin.com/news/investor-home-purchases-q1-2024
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Source: Redfin