Redfin Reports Investor Home Purchases Plateau After a Pandemic-Era Rollercoaster Ride
Investor home purchases have settled near pre-pandemic levels of around 50,000 per quarter, with typical seasonal ups and downs. Investors bought 49,380 homes in the third quarter, compared with 50,535 last year. By comparison, investors were buying nearly 100,000 homes per quarter during the 2021 homebuying frenzy.
In dollar terms, investors purchased
In September,
“Investors are finding a balance after several years of whiplash: They bought up homes at a frenzied pace in 2021 and the beginning of 2022, then quickly backed off when the housing market slowed as mortgage rates rose,” said Redfin Senior Economist Sheharyar Bokhari. “Now there’s a middle ground. It’s less appealing to buy homes to flip or rent out than it was at the start of the pandemic, when demand from both homebuyers and renters was robust. But it’s more appealing than it was last year, when soaring home prices and borrowing costs put a big damper on demand.”
There are a few key reasons investor activity is settling back to pre-pandemic levels:
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It’s harder for investors to buy homes, then sell them for a big profit than it was during the pandemic because home prices and loan costs are high. The typical home sold by an investor in October went for
55% more ( ) than the investor bought it for. That’s down from a$181,567 64% gain a year earlier. But interest rates are lower than a year ago and homebuying demand has improved a bit over the last few months. Investors who flip homes are still reaping bigger gains than they were before the pandemic, when homes bought by investors were selling for roughly45% more. Just7% of homes bought by investors sold for a loss in October; shortly before the pandemic, the norm was about10% . - A glut of new apartment supply hitting the market has put a lid on rent growth, meaning it’s less lucrative to buy a rental property than it was during the pandemic. But there is strong demand for rentals, largely because it’s hard for individuals to afford to buy a home. In fact, the number of renter households is growing three times faster than that of homeowner households. Rents have stabilized over the last year, but they’re still much higher than they were before the pandemic–and rents are rising quickly on the East Coast and in the Midwest.
Investors Bought
Real estate investors purchased
Investors’ market share has fallen to near pre-pandemic levels: In the third quarters of both 2018 and 2019, investors bought roughly
Investor market share hit a record high of
Investor Purchases Are Falling Fast in
While investor purchases are stabilizing nationwide, they are falling fast in some metros and rising quickly in others.
Investor purchases fell most in
Investors are backing off from buying homes in
In
Investor Purchases of Condos Fell
Investor purchases of condos fell
The downturn in investor activity in
Investors bought far more single-family homes in the third quarter than any other property type. Single-family homes made up
In terms of market share, investors bought
Other Metro-Level Highlights
Investor Market Share: Q3 2024
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In
Miami , investors bought28.2% of all homes that sold in the third quarter, the biggest share of any metro in this analysis. -
Investors bought
7.8% of homes that sold inProvidence, RI in the third quarter, the smallest share of the metros in this analysis. -
Investor market share increased most in
Anaheim, CA , rising to24.3% from22.2% . -
Even though investors still have the highest market share in
Miami , it has fallen the most from a year ago, dropping to28.2% from31.2% .
Investor Capital Gains: October 2024
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In
Detroit , the typical home sold by an investor went for135% more than they bought it for, the biggest gain among the metros in this analysis. -
The smallest capital gains were in
Phoenix (32% ),Las Vegas (34% ) andSacramento, CA (39% ). -
In
Milwaukee , the typical home sold by an investor went for97% more than they bought it for, up from a31% gain a year earlier. That’s the biggest gain among the metros Redfin analyzed. -
In roughly half of the metros in this analysis, investors’ median capital gain declined year over year. In
Washington, D.C. , the typical home sold by an investor went for a45% premium, down from a74% premium.
Redfin’s report is based on its analysis of county-level home purchase records across 39 of the most populous
To view the full report, including charts, metro-level data and additional methodology, please visit: https://www.redfin.com/news/investor-home-purchases-stabilize-q3-2024/
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Source: Redfin