Investors Bought a Record Share of Homes in the First Quarter, Despite 17% Decline in Purchases from Pandemic Peak

Rhea-AI Summary

Redfin reports a decline in real estate investor purchases, down 11.5% from Q4 2021 and 16.5% from Q3 2021. However, investors purchased 20% of homes sold in Q1 2022, up from 19.2% in the prior quarter, indicating an increased market share despite fewer transactions. Investor activity is attributed to high demand for rental properties amidst soaring rents. Atlanta saw the largest drop in investor purchases at -25.3%, while low-priced homes saw an increase in investor interest, at a record 25.3% of such purchases.

Positive

• Investors bought 20% of homes sold in Q1 2022, up from 19.2% in Q4 2021.
• Investor purchases of low-priced homes increased by 8.3% in Q1 2022.

Negative

• Overall investor purchases declined by 11.5% from Q4 2021 to Q1 2022.
• Investor purchases of high-priced homes fell by 27.1% in Q1 2022.

In Atlanta, one-third of homes were bought by investors

Redfin finds surging borrowing costs and home prices prompted real estate investors to pump the brakes, especially for high- and mid-priced homes

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The number of homes purchased by real estate investors in the first quarter declined 11.5% from the fourth quarter of 2021 and 16.5% from the third quarter of 2021, when investor purchases hit a record high, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. Still, investor purchases remained above pre-pandemic levels, and investors bought up a larger share of America’s homes than ever before. They purchased a record 20% of homes that sold in the first quarter, up from 19.2% one quarter earlier and 15.3% one year earlier. A decrease in overall home purchases nationwide allowed investors to increase their market share even while purchasing fewer homes.

Redfin’s analysis is based on county records across 40 of the most populous U.S. metropolitan areas and defines an investor as a buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes.

“Investor home purchases are falling for the same reason overall home purchases are falling: Surging interest rates and high housing prices have made it more expensive to get a mortgage and buy a home,” said Redfin Senior Economist Sheharyar Bokhari. “While roughly three-quarters of investor purchases are made with cash, investors are still impacted by interest rates because they often take out loans to get that cash.”

“The fact that investors are still able to grow their market share while buying fewer homes signals they’re not feeling the pain of higher interest rates as intensely as individual buyers, many of whom are getting priced out of the housing market altogether,” Bokhari added. “It also indicates that the individuals who can still afford to buy will continue to face competition from investors.”

The drop in investor purchases over the last two quarters may indicate investor purchases are past their peak and returning to normal. Up until the end of 2021, investor purchases had been climbing steadily since the pandemic began, in defiance of normal seasonality. Meanwhile, overall home purchases seesawed in typical seasonal fashion. Now it seems investor activity is getting back on track with the market as a whole.

While investor purchases have slowed, they remain above pre-pandemic levels, in part because investors can rent out the homes they buy and cash in on soaring rents. Demand for rentals is high because there aren’t enough homes for sale, and the ones that are for sale are often prohibitively expensive.

Investors Purchases Fell in Places Like Atlanta and Jacksonville, Where Investors Have the Largest Share

The top 10 metros by investor market share all saw investor purchases decline in the first quarter. Investor purchases fell 25.3% quarter over quarter in Atlanta, where investors bought 33.1% of homes that sold—the highest market share of any metro Redfin analyzed.

Top 10 U.S. Metros By Investor Market Share: First Quarter 2022

	Share of Purchased Homes Bought by Investors in Q1 2022 (Market Share)	QoQ Change in Investor Purchases
Atlanta, GA	33.1%	-25.3%
Jacksonville, FL	32.3%	-21.7%
Charlotte, NC	32.2%	-19.1%
Phoenix, AZ	29.0%	-8.6%
Miami, FL	28.2%	-3.6%
Las Vegas, NV	26.8%	-16.5%
Orlando, FL	25.7%	-12.9%
Tampa, FL	24.7%	-13.0%
Nashville, TN	24.6%	-16.5%
Columbus, OH	22.8%	-20.5%

Jennifer Bowers, a Redfin real estate agent in Nashville, said investors are pulling back from the market because they’re hoping prices will drop.

“Investors are on the hunt for deals. They’re waiting for homes to linger on the market for longer,” she said. “Plus, they bought so many houses at the height of the pandemic that some amount of pullback is natural. A few months ago, 95% of homes for sale in Nashville would get at least one cash offer from an investor—one of my listings got eight. Today, most homes aren’t getting any. This is good news for regular buyers. While some of them will still get into bidding wars with investors, they won’t necessarily have to waive every contingency and offer astronomically over the asking price to compete.”

Investor Purchases of High- and Mid-Priced Homes Decline While Purchases of Low-Priced Homes Rise

Investors bought a record 25.3% of all low-priced homes that were purchased in the metros tracked by Redfin in the first quarter, compared with 18.1% of mid-priced homes and 16% of high-priced homes.

Investor purchases of high-priced homes fell 27.1% quarter over quarter in the first quarter. Investor purchases of mid-priced homes also declined, down 19.1%. But investor purchases of low-priced homes increased 8.3%. The typical home investors purchased cost $427,174, up from $425,298 one quarter earlier and $372,076 one year earlier.

Investor Purchases of Single-Family Homes Drop 14%—More Than Any Other Property Type

Single-family homes remained the most popular property type for investors, representing 73% of purchases in the first quarter, while condos/co-ops made up 15.9%, townhouses made up 6.6% and multifamily properties made up 4.5%. But investor purchases of single-family homes dropped 14.4% quarter over quarter, the most of any property type. Investor purchases of condos/co-ops and multifamily properties also declined, falling 4.5% and 0.4%, respectively. The only property type that saw an increase was townhouses, with investor purchases climbing 1.5%.

To read the full report, including charts, metro-level data and methodology, please visit: https://www.redfin.com/news/investor-home-purchases-q1-2022

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center,

View source version on businesswire.com: https://www.businesswire.com/news/home/20220615005369/en/

Redfin Journalist Services:

Alina Ptaszynski, 206-588-6863

press@redfin.com

Source: Redfin

FAQ

What percentage of homes did investors buy in Q1 2022 according to Redfin?

Investors purchased 20% of homes sold in Q1 2022.

How much did investor purchases decline from Q4 2021 to Q1 2022?

Investor purchases declined by 11.5% from Q4 2021 to Q1 2022.

Which U.S. metro had the highest market share for investor purchases?

Atlanta had the highest market share for investor purchases at 33.1%.

What was the change in investor purchases of low-priced homes in Q1 2022?

Investor purchases of low-priced homes increased by 8.3% in Q1 2022.

What was the decline in investor purchases of high-priced homes in Q1 2022?

Investor purchases of high-priced homes fell by 27.1% in Q1 2022.