Investor Home Purchases Return to Pre-Pandemic Level in Q3

On Friday, Redfin reported that real estate investors purchased 2.3% fewer homes in Q3 compared to a year earlier. The small size of the change is notable because it comes after four years of huge swings driven by the wild pandemic-era housing market. For instance, investor purchases surged as much as 144% year-over-year in 2021, then dropped as much as 47% last year.

Investor home purchases have settled near pre-pandemic levels of around 50,000 per quarter, with typical seasonal ups and downs, Redfin explained. Investors bought 49,380 homes in Q3, compared with 50,535 in 2023Q3. By comparison, investors were buying nearly 100,000 homes per quarter during the 2021 homebuying frenzy.

In dollar terms, investors purchased $38.8 billion worth of homes in Q3. That’s up 3.4% from a year earlier, similar to the increase in home-sale prices over the same period.

In September, 8.3% of home listings were from investors, down marginally from 8.7% a year earlier but up slightly from the pre-pandemic share.

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

“Investors are finding a balance after several years of whiplash: They bought up homes at a frenzied pace in 2021 and the beginning of 2022, then quickly backed off when the housing market slowed as mortgage rates rose. Now there’s a middle ground. It’s less appealing to buy homes to flip or rent out than it was at the start of the pandemic, when demand from both homebuyers and renters was robust. But it’s more appealing than it was last year, when soaring home prices and borrowing costs put a big damper on demand.”