A new report from Redfin says that investor purchases of U.S. homes fell a record 45.8% year over year in Q4 2022. They said the high cost of borrowing money and the prospect of substantial home-price declines have made real estate investing less attractive. In addition, they point out that the 2nd biggest decline on record occurred in 2008, when investor purchases slumped 45.1% during the subprime mortgage crisis.
Some key points:
- Investor home purchases fell a record 46% year over year in the fourth quarter.
- Investors bought 18% of homes that sold, down from 19% a year earlier.
- Pandemic boomtowns Las Vegas and Phoenix saw investor purchases fall over 60% – more than all of the other metros Redfin analyzed.
- Investors pulled back from single-family homes more than condos and townhomes, and high-priced properties more than low-priced properties.
“It’s possible that investors will start to wade back into the market this year given that mortgage rates have ticked down from their 2022 high – especially if home prices show signs of bottoming…But it’s unlikely that investors will return with the same vigor they had in 2021…” Said Redfin Senior Economist Sheharyar Bokhari.