Investor Purchases Surge to 2-Year High
Investors bought 1 of every 6 U.S. homes that sold, purchasing $43 billion worth of properties, and 1 of every 4 low-priced homes that sold.
SEATTLE – Investor purchases of U.S. homes rose 3.4% year over year in the second quarter – the largest increase since the second quarter of 2022, according to the real estate brokerage Redfin.
Investors purchased $43 billion worth of homes in the second quarter, up 13.7% from a year earlier – also the biggest gain in two years.
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% last year as declining rents and home values ate into potential profits.
“One reason real estate investors are coming out of hibernation is to take advantage of robust demand from renters,” said Redfin Senior Economist Sheharyar Bokhari. “Elevated home prices and mortgage rates have pushed homeownership out of reach for a lot of Americans, which is fueling demand for rentals. Investors, many of whom can afford to pay in cash to avoid the sting of high mortgage rates, are cashing in on that demand.”
Mortgage rates did drop to the lowest level in over a year last week after a weaker-than-expected jobs report stoked recession fears, which helped homebuyers gain tens of thousands of dollars of purchasing power. Still, homeownership remains out of reach for many Americans.
While renter demand is strong, rents have been sluggish because a lot of new apartments have been hitting the market following a construction boom during the pandemic. That means property owners have been competing for tenants and have had less room to boost prices. But apartment construction is starting to slow, which could cause rents to rebound in the coming years – another factor that may be bringing investors off of the sidelines.
Investor purchases were near a low point in the second quarter of 2023 – another reason they’re now rising on a year-over-year basis. They appear to be inching back toward pre-pandemic levels.
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