Redfin Reports Investor Home Purchases Hit Record, Surpassing Pre-Pandemic Levels

Rhea-AI Summary

Real estate investors bought a record 67,943 U.S. homes in Q2 2021, marking a 15.1% increase from Q1 and 106.7% from Q2 2020, according to Redfin. Investment amounts reached $48.5 billion, a rise from $38.9 billion in Q1 2021. Investor share was 15.9% of total home purchases, near pre-pandemic levels. A significant 74% of these purchases were cash transactions, while single-family homes gained investor interest. Cities like Phoenix and Miami saw the highest investor activity.

Positive

• Record of 67,943 homes purchased by investors in Q2 2021.
• Investor spending reached $48.5 billion, up from $38.9 billion.
• Investor market share at 15.9%, close to pre-pandemic levels.

Negative

• Increased competition for homebuyers due to cash purchases by investors.

SEATTLE, July 22, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — Real estate investors purchased 67,943 U.S. homes in the second quarter of 2021, the highest quarterly figure on record, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. That's up 15.1% from the prior quarter, and up 106.7% from the second quarter of 2020, when activity in the housing market was stalled due to pandemic restrictions.

In dollar terms, investors bought a record $48.5 billion worth of homes in the second quarter, up from $38.9 billion in the prior quarter and $20.9 billion a year earlier. The typical home they purchased cost $439,600—23.7% higher than a year earlier—amid surging housing prices.

Redfin defines an investor as any institution or business that purchases residential real estate. Any "records" referenced in this release date back to the year 2000.

Investor market share has nearly returned to pre-pandemic levels. Investors bought about one of every six homes (15.9%) that were purchased in the second quarter of 2021—just shy of the 16.1% record market share they held in the first quarter of 2020, before the pandemic triggered an economic downturn.

"Investors see soaring home prices as an opportunity," said Redfin Senior Economist Sheharyar Bokhari. "With housing values consistently on the rise, solid returns are pretty much guaranteed—especially when you're an investor who has access to extremely cheap debt."

Bokhari continued: "Investors are also taking advantage of surging demand in the rental market. With so many Americans priced out of homeownership, investors can turn an easy profit by buying up properties and renting them out."

The jump in activity comes after investors pressed pause on home purchases last year amid economic uncertainty, pandemic shutdowns and a soft rental market.

"With investors throwing money at the housing market, some homebuyers are finding it tough to compete," Bokhari said. "Investors frequently pay with all cash, which means they often have a much higher chance of winning bidding wars than buyers who take out mortgages."

About three-quarters (74%) of investor home purchases in the second quarter were financed with all cash—the highest level since 2018.

Investors Are Snapping Up More Single-Family Homes and Condos

While multifamily buildings are the most common property type purchased by investors, investor market share in this segment has declined during the pandemic. Investors bought about one-quarter (26.5%) of the multifamily properties that sold in the second quarter, down from a peak of one-third (33.3%) in 2019.

Meanwhile, investor market share of single-family homes and condos is on the rise after dropping during the pandemic. Investors purchased 16.1% of single-family homes and 15.1% of condos that sold in the second quarter, up from a pandemic low of 9.4% and 12.4%, respectively, a year earlier.

Single-family homes have been a hot commodity during the pandemic as house hunters have prioritized space and privacy over short commute times and proximity to cities. And now, with Americans returning to the office and single-family home prices through the roof, demand for condos is on the rise after dropping during the pandemic.

Investors Have the Highest Market Share in Phoenix and Miami

In Phoenix, almost one-quarter (24.5%) of homes that sold in the second quarter were purchased by investors—the highest share of the 41 U.S. metropolitan areas Redfin analyzed. Next came Miami (24.2%), Atlanta (23.6%), Charlotte, NC (22.8%) and Las Vegas (22.8%).

In recent years, investors and individual homebuyers alike have crowded into mid-sized cities that are more affordable and offer more space than major hubs like San Francisco and New York. The pandemic accelerated this trend, with so many Americans suddenly able to work from anywhere. Phoenix was the most popular migration destination in the second quarter for Redfin.com users looking to move to a different metro. Miami and Las Vegas were also in the top five.

To read the full report, including charts and a full metro-level data breakout, please visit: https://www.redfin.com/news/investor-home-purchases-q2-2021/

About Redfin
Redfin (www.redfin.com) is a technology-powered real estate broker, instant home-buyer (iBuyer), lender, title insurer, and renovations company. 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. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 95 markets across the U.S. and Canada and employ over 4,100 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, click here.

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SOURCE Redfin

FAQ

What was the record number of homes purchased by investors in Q2 2021?

Investors purchased a record 67,943 U.S. homes in Q2 2021.

How much did investors spend on homes in Q2 2021?

Investors spent $48.5 billion on homes in Q2 2021.

What percentage of homes purchased in Q2 2021 were bought by investors?

Investors bought 15.9% of the homes sold in Q2 2021.

Which cities had the highest investor market share in Q2 2021?

Phoenix and Miami had the highest investor market shares, at 24.5% and 24.2%, respectively.

How did investor activity change compared to Q2 2020?

Investor purchases increased by 106.7% compared to Q2 2020.