Realtor.com reports that investors have reduced their home buying activity in recent years. However, their latest report shows that investor share has increased despite purchasing fewer homes. The data was obtained by analyzing deed records from January 2000 to March 2024, both nationally and in the 150 largest US metros. The analysis only included single-family homes, condos, townhomes, and row houses, excluding multi-family buildings that are not typically competitive in the housing market.
In 2023, investor activity declined to 13.1% of home purchases, down from 13.8% in 2022. This drop can be attributed to the high home prices and mortgage rates throughout the year. Despite the decrease, 2023 still marked the second-highest share of investor purchases since 2001.
Although the share of investor buyers decreased by less than 1 percentage point, the number of investor transactions fell by 25.3% in 2023 compared to the previous year. This decline was higher than the 20.4% drop in non-investor home purchases, indicating that investors pulled back more quickly in response to the challenging housing market conditions.
Key points from the report:
- Investors represented 14.8% of home purchases in Q1 2024, the highest share on record.
- The number of investor purchases decreased slightly annually, reaching the lowest level since 2020 but still surpassing pre-pandemic levels by 10.6%.
- While more non-investors are purchasing properties in all cash transactions, investor cash-purchase activity declined annually in the first quarter as investors increasingly utilized debt financing. This shift was particularly noticeable among small and medium investors, who are more inclined to use debt over cash.
- Small investors accounted for 62.6% of investor purchases, the highest share in the data’s history. Small investors saw a 6.4% increase in property acquisitions on an annual basis, while medium and large investor purchase counts decreased by 3.8% and 13.9%, respectively.
- Metros in the Midwest and South regions experienced a significant and growing share of investor activity.
Read the full report at Realtor.com here.