Investors Keep Withdrawing From Housing Market

No retreat, no surrender — it’s not a motto investors are living by when it comes to today’s housing market.

Investors bought 45 percent fewer homes in the second quarter compared to a year ago, according to a Redfin report. The annual decline is the second-largest recorded by the copmpany in the last 15 years; just after this year’s first quarter, when investor purchases dropped 48 percent.

Investors purchased 50,000 homes in the second quarter, which was actually significantly more than in the first quarter.

Market share for investors, meanwhile, continues to plummet. Among the homes sold in the second quarter, investors purchased 15.6 percent of them. During the same period last year they purchased 19.7 percent of all homes sold.

Mortgage rates, low inventory and persistently high home prices continue to deter investors and individuals alike from buying a home. Investors seem to be feeling the pinch more, however, as overall home sales only dropped 31 percent year-over-year.

Investors are drawn towards low-priced starter homes, hoping to fix up the 1,400-square-foot-or-less properties and flip them to traditional homebuyers. Those homes accounted for 39.2 percent of investor purchases in the second quarter, down a hair from a record set in the first quarter.

Three metros analyzed by Redfin felt investor purchases drop by 65 percent year-over-year: Jacksonville, Las Vegas and Phoenix. Atlanta and Charlotte also saw significant declines of 64 and 62 percent, respectively.

Once again, investor purchases fell in every metro analyzed by Redfin, 39 in all. The smallest decline in investor purchases was in Chicago, which saw a 13 percent year-over-year dip.

Investor market share fell in 25 of the 39 markets and only increased modestly in the other 14. The largest market share increase came in New York, where investors bought 18 percent of the homes sold in the second quarter. The highest overall market share for investors was still in Miami, where investors accounted for 30 percent of purchases, easily outpacing the next-closest metros, including Anaheim and San Francisco.

Low inventory resulted in investor single-family home purchases declining from 73 percent of their buys in 2022’s second quarter to 68 percent during the same period this year. Condos continue to take up more investor space, making up 20 percent of their purchases this past quarter compared to 16 percent during last year’s second quarter.