Investor home purchases fell 30.2% year over year nationwide in the third quarter. This marks the largest decline since the Great Recession. The only time we saw anything close in recent years was the second quarter of 2020, when investor activity fell in the early days of the pandemic.
That’s according to a new report from Redfin, which showed investor purchases outpaced a 27.4% drop in overall home purchases nationwide.
Investor purchases were down 26.1% on a quarter-over-quarter basis. This is the largest quarterly decline on record aside from the beginning of the pandemic. In comparison, overall home purchases posted a 17.4% quarterly drop.
Investors also lost market share for the second quarter in a row. They bought about 65,000 homes in the metros Redfin tracks in 3Q — that marks 17.5% of all homes purchased. That’s down from 19.5% in 2Q and 18.2% from last year. It is still up from roughly 15% before the pandemic.
Pandemic “boomtowns” saw the largest decline in investor purchases:
- Phoenix was down 49.4% year over year in 3Q, the largest decline among the 40 metros in the analysis
- Portland, Ore. was next, down 47.4%
- Las Vegas came in third, down 44.8%
- Sacramento, Calif. was down 43.2%
- Atlanta was down 42.2%
- Charlotte, NC; Miami; Denver; San Diego; and Riverside, Calif. rounded out the top 10 slumps.
Investors bought $42.4 billion worth of homes in the third quarter. That’s down 26.3% from $57.6 billion one year earlier and down 30.5% from $61 billion one quarter earlier.
The typical home investors purchased cost $451,975. That’s up 6.4% from one year earlier but down 4.3% from one quarter earlier.
“It’s unlikely that investors will return to the market in a big way anytime soon. Home prices would need to fall significantly for that to happen,” said Redfin Senior Economist Sheharyar Bokhari. “This means that regular buyers who are still in the market are no longer facing fierce competition from hordes of cash-rich investors like they were last year.”