Real Estate Investors Purchased a Record $60.1B in Q2

A new analysis by Redfin found that real estate investors bought 87,500 U.S. homes in Q2 of 2022, up 11% quarter-over-quarter and 5.9% year-over-year. Q2’s totals are down from the all-time high of 93,700 recorded in Q3 of 2021, a time that many considered the height of the pandemic-driven homebuying frenzy. Overall, Redfin found that investors are buying more homes than they were before the pandemic, roughly 60,000 homes per quarter in 2019.

The study also found that investor market share has also begun to level off, but remains above pre-pandemic levels, as investors purchased 19.4% of the homes sold in Q2, down slightly from a record 20.1% in Q1 2022, the first drop after nearly two consecutive years of increases.

“The cooldown in the overall housing market motivates some investors and scares others off,” said Redfin Senior Economist Sheharyar Bokhari. “Investors are contending with sky-high home prices, just like other buyers. Those who plan to turn homes into rentals are still in the market because high rental payments help offset the cost of the home, and the home will likely grow in value over time. Others are motivated by discounts from home builders looking to sell off extra inventory as individual buyers pull back. But investors in the flipping business have quicker turnaround times, so they’re shying away because the prospect of falling home prices means they may lose money when they relist in six months or a year.”

In dollar terms, investors purchased a record $60.1 billion worth of real estate in Q2, up from $50.5 billion in Q1, and $54.5 billion year-over-year.

“Investor purchases probably won’t bounce back to 2021 levels, but they’ll likely remain more common than before the pandemic because the housing market is stable compared with today’s volatile stock market. Those who buy properties as rentals will still cash in, with high demand and vacancies near record lows,” Bokhari said. “But investors will be less of a roadblock for regular buyers as the housing-market slowdown reduces competition. Investors and individual buyers who can afford to purchase homes have a leg up because other prospective buyers have been priced out.”

In the types of homes that investors pursued in Q2, roughly 35,000 were low-priced homes, down 6% quarter-over-quarter, and 7.6% year-over-year. But investors are still buying more low-priced homes than before the pandemic, having bought roughly 30,000 per quarter in 2019.

Investors bought nearly 28,000 mid-priced homes, up 25.3% from a year earlier, but down from 31,000 in Q3 of 2021. But that’s nearly double pre-pandemic levels, as investors purchased nearly 15,000 mid-priced homes per quarter in 2019. Investors bought approximately 25,000 high-priced homes, up 8.9% year-over-year.

• Purchases of single-family homes, the most popular property type found by Redfin among investors, leveled off, but remains well above pre-pandemic levels. Investors purchased nearly 65,000 single-family homes in Q2, up 8.5% year-over-year—down from the record-high of nearly 70,000 reported in Q3 of 2021.
• Investors bought approximately 14,000 condos, down 4.3% year-over-year, but up from about 10,000 per quarter before the pandemic.
• Investors purchased nearly 3,500 multi-family properties, down 4.1% year-over-year, and up from nearly 3,000 per quarter before the pandemic.
• Investors purchased a record 5,300 townhouses, up 10.9% year-over-year, compared to nearly 3,000 townhouses purchased per quarter before the pandemic.

Regionally, investors targeted the northern Florida town of Jacksonville, Florida, where investor purchases were up more than 40% year-over-year in Q2. In Q2, investors purchased 31.9% of the homes sold in Jacksonville, the highest market share of the metros in Redfin’s analysis—followed by Atlanta at 31.8% of the homes purchased by investors, Las Vegas at 31.5%, Phoenix at 31.2%, and Miami at 29%.

Providence, Rhode Island was the least popular metro for investors, with investors comprising just 7.3% of the market share, followed by Washington, D.C. at 8.1%; Montgomery County, Pennsylvania at 8.3%; Seattle at 8.7%; and Warren, Michigan at 9.5%.