Investor Home Purchases Back on Track in Q2, Posting Biggest Gain in Two Years

On Thursday, Redfin reported that investors purchased $43 billion worth of homes in Q2. That is up 13.7% from a year earlier and the biggest gain in two years. Investor purchases were near a low point in 2023Q2—another reason they’re now rising on a year-over-year basis. They appear to be inching back toward pre-pandemic levels.

Redfin points out that investors purchased 16.8% of US homes that sold in Q2, the highest second-quarter share on record aside from 2022. That’s down from an all-time high of 20.8% hit during the pandemic but up from 16% a year earlier.

Investors have seen their market share inch up because they’ve come off the sidelines faster than individual buyers, Redfin said. While investor home purchases rose 3.4% in Q2, overall US home purchases fell 1.9% as elevated mortgage rates and prices deterred buyers. Investors are less sensitive to mortgage rate fluctuations than regular buyers because most of them (69%) pay in cash, though they’re still somewhat sensitive because they often take out different loans to cover home flipping and other expenses.

In remarks accompanying the report, Redfin Senior Economist Sheharyar Bokhari said:

“One reason real estate investors are coming out of hibernation is to take advantage of robust demand from renters. 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.”