Investor purchases accounted for 15.4% of all home purchases nationally in the second quarter of 2021, compared with 11.5% in the same quarter in 2020 – a year-over-year increase of 3.9 percentage points – according to a new report released today from RealtyTrac.
In addition to the annual increase in investor purchase activity, the Fall 2021 RealtyTrac Investor Purchase Report shows that investors are typically paying less for homes than consumer homebuyers, and that investors continue to pay for most of their purchases with cash.
While the year-over-year percentage of investor purchases rose, the investor purchase share remained virtually the same as the previous quarter with investors accounting for 15.4% of all purchases in Q2 2021 compared with 15.9% in Q1 2021. According to RealtyTrac Executive Vice President Rick Sharga, the increases, while notable, do not reflect a significant change of course for investor purchase activity.
“Historically, investors have always accounted for somewhere between 10% and 15% of residential home purchases, and our data shows that this is still the case today, albeit at the high end of that range. But the data doesn’t support the ‘Wall Street is buying up Main Street’ theme that’s been a popular theory for the past year or so,” Sharga said.
The RealtyTrac report, citing home sales data from ATTOM Data Solutions, also shows that investors across the country paid an average of 29.4% less than consumers in Q2 2021 with a median purchase price of $205,000 for investors compared to $290,230 for all home purchases.
“Another misconception is that investors are overpaying for properties, making it difficult for consumers to compete and artificially driving up prices,” Sharga said. “But successful investors tend to look for below-market pricing in order to make a profit on their purchases. And many of them buy properties with cash, which gives them a chance to get properties at a discount.”