Investors’ Interest in US Housing Market Continues to Cool

Redfin reported today (11-22-22) that investor home purchases fell 30.2% year-over-year in Q3. According to Redfin, this is the largest decline since the Great Recession, aside from 20Q2 amid the onset of the COVID-19 pandemic. The decline in investor home purchases outpaced the 27.4% drop in overall home purchases nationwide in Q3.

Quarter-over-quarter, investor purchases fell 26.1%—the largest quarterly drop on record, again, with the exception of the start of the pandemic. That compares with a 17.4% quarterly drop in overall home purchases.

Investors lost market share for the second consecutive quarter as they “pumped the brakes on purchases.” They purchased approximately 65,000 homes in the metro areas tracked by Redfin in Q3, or 17.5% of all home purchases during the time period. That is down from 19.5% in Q2 and 18.2% in 21Q3, but still up slightly from roughly 15% before the pandemic.

In dollar terms, investors bought $42.4 billion worth of homes in Q3, down 26.3% from $57.6 billion one year earlier and down 30.5% from $61 billion in Q2. The typical home that investors purchased cost $451,975, up 6.4% from one year earlier but down 4.3% from one quarter earlier.

According to Redfin Senior Economist Sheharyar Bokhari, the good news is that “It is unlikely that investors will return to the market in a big way anytime soon. Home prices would need to fall significantly for that to happen. This means that regular buyers who are still in the market are no longer facing fierce competition from hordes of cash-rich investors like they were last year.”