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Housing market outlook: Investors are scooping up roughly 1 in 5 homes sold

Housing market outlook: Investors are scooping up roughly 1 in 5 homes sold


At the start of last year, investors pulled back; their home purchases plummeted almost 50%, according to Redfin, not too far off from existing home sales, which as we know fell to their lowest point in almost 30 years. 

It was a change from their activity throughout the pandemic-fueled housing boom though. At that time, investor home purchases more than doubled. Everyone was buying homes because mortgage rates were historically low and remote work became a thing. It all changed when mortgage rates soared, and in some areas, home values declined and rents cooled—putting a dent in investors’ profits. And let’s not forget borrowing costs were much higher too.

Now, they’re back. “Investor home purchases are rising—albeit slightly—for the first time in almost two years,” according to Redfin. In a newly published analysis, Redfin found investors bought 44,000 homes in the first quarter, up half a percent from a year earlier. (Redfin defines an investor as “any institution or business that purchases residential real estate.”) 

Investors bought almost 19% of homes sold in the first quarter this year, so roughly one in five homes, per Redfin. That’s fewer homes than before and throughout the pandemic, but it is the highest share in close to two years, the analysis read.

The rationale behind the return being, “with home prices and rents back on the rise and the initial shock of elevated mortgage rates in the rearview mirror, investors are easing their foot off the brake pedal,” according to Redfin. That being said, they’re making more money than they were a year ago, too. In March of this year, the typical home sold by an investor drove a slightly more than 55% return, or close to $175,000 profit. Last year, in the typical situation, an investor sold a home for more than $146,000 than they bought it for, or above 46%. Fewer investors sold at a loss too. 

Redfin’s analysis found investors are buying both more expensive homes than before—and a record share of the most affordable homes in the country. “The typical home bought by investors in the first quarter cost $464,560, up 9.2% from a year earlier,” it said. “Investors purchased $31.3 billion worth of homes in the first quarter, up 6.6% year over year.” 

Here’s the thing, while their purchases of more expensive homes increased the most in the first quarter, low-priced homes still represent a larger share. So low-priced homes amounted to 47.5% of…

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