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Redfin Reports Investor Home Purchases Plateau But Remain Well Above Pre-Pandemic Levels

Investors reacted to the slowing housing marketplace in various ways, with some benefiting from cooling competition and elevated rental demand, among others pressing pause hoping of lower prices and much more economic certainty later on

SEATTLE–(BUSINESS WIRE)–(NASDAQ: RDFN) Property investors purchased 87,500 U.S. homes in the next quarter, up 11% quarter over quarter and 5.9% year over year, in accordance with a new report from Redfin (www.redfin.com), the technology-powered property brokerage. Thats down from the all-time most of 93,700 in the 3rd quarter of 2021, the height of the pandemic-driven homebuying frenzy. Still, investors are buying a lot more homes than these were prior to the pandemic; they purchased roughly 60,000 homes per quarter in 2019.

Investor market share in addition has began to level off but remains above pre-pandemic levels. Investors bought 19.4% of homes that sold in the next quarter, down slightly from the record 20.1% in the initial quarter, the initial drop after nearly two straight years of increases. But its up from 16.2% per year earlier and roughly 15% per quarter in 2019.

In dollar terms, investors purchased an archive $60.1 billion worth of property in the next quarter, up from $50.5 billion in the initial quarter and $54.5 billion per year earlier.

The cooldown in the entire housing marketplace motivates some investors and scares others off, said Redfin Senior Economist Sheharyar Bokhari. Investors are contending with sky-high home prices, exactly like other buyers. Those that intend to turn homes into rentals remain on the market because high rental payments help offset the price of the house, and the house will probably grow in value as time passes. Others are motivated by discounts from your home builders seeking to sell off extra inventory as individual buyers pull back. But investors in the flipping business have quicker turnaround times, so theyre shying away as the prospect of falling home prices means they could lose money if they relist in half a year or perhaps a year.

Investor purchases probably wont bounce back again to 2021 levels, but theyll likely remain more prevalent than prior to the pandemic as the housing marketplace is stable weighed against todays volatile currency markets. Those that buy properties as rentals will still profit, with popular and vacancies near record lows, Bokhari continued. But investors will undoubtedly be less of a roadblock for regular buyers because the housing-market slowdown reduces competition. Investors and individual buyers who is able to afford to get homes have a leg up because other prospective buyers have already been priced out.

Purchases of both affordable and expensive homes are plateauing following a pandemic-driven surge

Investors bought roughly 35,000 low-priced homes in the next quarter, down 6% quarter over quarter and 7.6% year over year. But investors remain buying more low-priced homes than prior to the pandemic; they purchased roughly 30,000 per quarter in 2019.

The story is comparable for mid-priced and high-priced purchases. Investors bought about 28,000 mid-priced homes, up 25.3% from the year earlier and down from the record 31,000 in the 3rd quarter of 2021. But thats nearly double pre-pandemic levels: Investors purchased about 15,000 mid-priced homes per quarter in 2019. Investors bought about 25,000 high-priced homes, up 8.9% year over year. While thats down from the record occur the 3rd quarter of 2021, its well above about 15,000 per quarter in 2019, prior to the pandemic.

Investors market share reaches or near record highs for both low- and mid-priced homes. Property investors bought 25% of low-priced homes that sold in the next quarter, comparable with the 25.1% record occur the initial quarter or more from 21.6% per year earlier. They bought an archive 18.8% of mid-priced homes, up from 17.9% in the initial quarter and 13.5% per year earlier. Investors bought 15.3% of high-priced homes that sold in the next quarter, down from the record 16.5% by the end of 2021 but up from 13.3% per year earlier.

Purchases of single-family homes, the most popular property type with investors, leveled off but remain well above pre-pandemic levels

Divided by property type, investor purchases of single-family homes, condos and multi-family properties follow exactly the same trend because the overall investor market: Theyre leveling off but remain well above pre-pandemic levels. Investors bought an archive amount of townhouses.

Investors purchased nearly 65,000 single-family homes in the next quarter, up 8.5% from the year earlier. Thats down from the record-high around 70,000 occur the 3rd quarter of 2021, but up from about 40,000 per quarter prior to the pandemic.

Investors bought about 14,000 condos, down 4.3% year over year but up from about 10,000 per quarter prior to the pandemic. They purchased roughly 3,500 multi-family properties, down 4.1% year over year or more from about 3,000 per quarter prior to the pandemic. Investors purchased an archive 5,300 townhouses, up 10.9% year over year. That compares with about 3,000 townhouse purchases per quarter prior to the pandemic.

In Jacksonville, investor purchases were up a lot more than 40% from the year earlier

Investors bought 31.9% of homes that sold in Jacksonville, FL in the next quarter, the best market share of the metros in this analysis. Its accompanied by Atlanta, where investors bought up 31.8% of homes. Next come NEVADA (31.5%), Phoenix (31.2%) and Miami (29%).

Investor purchases were up from the year earlier and 25 % earlier in every five metros with the largest market shares. They rose 40.7% year over year in Jacksonville, 28.2% in Atlanta, 13.9% in NEVADA, 2.3% in Phoenix and 9.3% in Miami.

Providence, RI was minimal popular metro for investors, with investors taking on a 7.3% market share. Next came Washington, D.C. (8.1%), Montgomery County, PA (8.3%), Seattle (8.7%) and Warren, MI (9.5%). Investor purchases rose from the year earlier in three of these five places. The exceptions are Seattle and Warren, where purchases declined 18.8% and 17.6%, respectively.

To learn the entire report, including methodology and extra metro-level data, visit: https://www.redfin.com/news/investor-home-purchases-q2-2022/.

About Redfin

Redfin (www.redfin.com) is really a technology-powered property company. We help people look for a spot to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for additional 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 house can take an instantaneous cash offer from Redfin or have our renovations crew fix up their house to sell for top level dollar. Our rentals business empowers millions nationwide to get apartments and houses for rent. Since launching in 2006, we’ve saved customers a lot more than $1 billion in commissions. We serve a lot more than 100 markets over the U.S. and Canada and employ over 6,000 people.

To learn more or even to contact an area Redfin agent, visit www.redfin.com. To understand about housing marketplace trends and download data, go to the Redfin Data Center. To be put into Redfin’s news release distribution list, email press@redfin.com. To see Redfin’s press center, just click here.

Contact Redfin

Redfin Journalist Services:

Erin Osgood, 206-588-6863

press@redfin.com

Source: Redfin

Released August 18, 2022


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