Investors Back In The Game As Investor Home Purchases Surge 13.7% In Q2, According To Redfin – Biggest Jump Since 2022

Investors bought more houses this year than they have since 2022.

A new report from real estate brokerage Redfin shows a 3.4% year-over-year increase in investor purchases for the second quarter. Investors snapped up $43 billion worth of properties, a 13.7% increase compared to last year.

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The housing market has seen investor activity fluctuate dramatically in recent years. During the pandemic buying frenzy in 2021, investor purchases skyrocketed. However, declining rents and property values in 2023 led to a nearly 50% plunge in investor activity.

Now, it seems to be stabilizing, with investors returning steadily.

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"One reason real estate investors are coming out of hibernation is to take advantage of robust demand from renters," Redfin Senior Economist Sheharyar Bokhari said. "Elevated home prices and mortgage rates have pushed homeownership out of reach for many Americans, 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."

A recent drop in mortgage rates, fueled by economic uncertainty, has relieved potential homebuyers. While this has boosted purchasing power, homeownership remains out of reach for many.

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Meanwhile, the rental market has seen slower rent growth because of a surge in new apartment construction. However, as the building boom cools, rents are expected to rise, which could encourage more investors to enter the housing market.

Investor purchases hit a low point last year, but recent data shows they're on the rebound, suggesting investors see opportunities in the residential real estate market.

Investors snapped up 16.8% of U.S. homes sold in the second quarter, a significant increase from the previous year but still below the pandemic peak. While overall home sales dipped because of high mortgage rates and prices, investors have been more resilient, with their purchases rising 3.4%. This is largely because they're less reliant on mortgages, with nearly 70% paying cash.

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The typical investor made a 58% profit on their home sales in June, down from 62.1% a year ago but still higher than pre-pandemic levels. However, the number of investors selling at a loss has decreased, suggesting market conditions are improving.

Investor interest in single-family homes is surging. Purchases of these properties increased 6.7% year-over-year in the second quarter, marking the largest gain in two years. The trend comes as investor activity in other property types – including multifamily units, condos, co-ops and town houses – has declined.

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Single-family homes now account for nearly 70% of investor purchases, the highest share since mid-2022. Conversely, the proportion of investors buying condos, town houses and multifamily properties has decreased.

Investors are also gaining a larger foothold in the single-family home market. In the first quarter, they purchased 16.4% of all single-family homes sold, up from 15.2% the previous year.

While investor presence in the condo market has also grown slightly, their share of the multifamily market has dipped – likely because of the higher costs and complexities associated with multifamily properties, which tend to be more attractive to investors with larger portfolios and deeper pockets.

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