Redfin: Investors Gravitate To Low-Priced Homes As Interest Rates Peak – NMP Skip to main content

Redfin: Investors Gravitate To Low-Priced Homes As Interest Rates Peak

Jun 15, 2022
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Staff Writer

Spiking borrowing costs and home prices prompted real estate investors to lose steam, especially for high- and mid-priced homes.

KEY TAKEAWAYS
  • The number of homes purchased by real estate investors in the first quarter declined 11.5% from the fourth quarter of 2021.
  • Investor purchases remained above pre-pandemic levels, as investors bought a record 20% of homes that sold in the first quarter

The number of homes purchased by real estate investors in the first quarter declined 11.5% from the fourth quarter of 2021 and 16.5% from the third quarter of 2021, when investor purchases hit a record high, according to a new report from Redfin.

The report tracks county records across 40 of the most populous U.S. metropolitan areas. 

While higher-priced homes decreased in sales, purchases of lower-priced homes increased. Investors bought a record 25.3% of all low-priced homes compared with just above 18% of mid-priced homes and 16% of high-priced homes.

“Investor home purchases are falling for the same reason overall home purchases are falling: Surging interest rates and high housing prices have made it more expensive to get a mortgage and buy a home,” said Redfin Senior Economist Sheharyar Bokhari. “While roughly three-quarters of investor purchases are made with cash, investors are still impacted by interest rates because they often take out loans to get that cash.”

The decline in investor purchases over the last two quarters may hint that investor purchases are past their peak and returning to normal. Up until the end of 2021, investor purchases had been climbing steadily since the pandemic began. Now it appears that investor activity is stabilizing congruently with the market while still remaining above pre-pandemic levels.

Investor purchases, however, remained above pre-pandemic levels as investors bought up a larger share of America’s homes than ever before, purchasing a record 20% of properties that sold in the first quarter, up from 19.2% one quarter earlier and 15.3% a year earlier.

Redfin found that investor activity is staying relatively stable due to rental demand, as investors are taking advantage of high rent rates and demand and leasing out their properties.

About the author
Staff Writer
Sarah Wolak is a staff writer at NMP.
Published
Jun 15, 2022
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