SEATTLE – Almost 1 in 5 U.S. homebuyers in the third quarter were investors rather than homesteaders, according to an analysis by Redfin economists.
That percentage of investor buyers is an increase from 16.1% in the second quarter and 11.2% in 2020’s third quarter. That means investors bought a record 90,215 homes in the third quarter, up 10.1% quarter-to-quarter and 80.2% year-to-year.
In the eight Florida metros included in the study, however, the percentage of investors is even higher. Only one metro, Fort Lauderdale, came close to the national average with 18.6% of homes sold to investors. The top Florida metro for investor purchases was Jacksonville, with almost 3 out 10 sales (28.1%) going to investors, and only one metro, West Palm Beach, fell below the national average with 15.4% of home purchased by investors.
Florida’s investor-purchased homes in 3Q
Fort Lauderdale: 18.6%, with a median sale price of $295,000
Jacksonville: 28.3%, with a median sale price of $253,000
Miami: 28.1%, with a median sale price of $375,000
Orlando: 23.5%, with a median sale price of $300,000
Tampa: 24.5%, with a median sale price of $282,100
West Palm Beach: 15.4%, with a median sale price of $335,000
Nationwide, the typical investor-purchased home cost $438,770, with 3 out of 4 (76.8%) cash sales.
“Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits,” says Redfin Senior Economist Sheharyar Bokhari. “Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn the homes they purchase into rentals, and they can now charge higher rents.”
Average monthly rents rose 10.7% year over year in September, the fastest growth in at least two years, while the median home sale price increased 13.9%.
“With cash-rich investors taking the housing market by storm, many individual homebuyers have found it tough to compete,” Bokhari said. “The good news for those buyers is that the housing market has started to cool. Bidding wars are on the decline, and if home-price growth continues to ease, we may see investors slow their roll.”
Redfin defines an investor as any institution or business that purchases residential real estate. All “records” in the report date back to the first quarter of 2000.
Single-family homes represented nearly 3 in 4 (74.4%) investor purchases in the third quarter – the highest level on record and up from 70.6% a year earlier. On the other hand, condos/co-ops were 16.9% of investor purchases – a record low and year-to-year decrease from 19.8%. Townhouses and multifamily housing represented 5.4% and 3.4% of investor purchases, little changed from a year earlier.
While low-priced homes still make up the lion’s share of investor purchases, their piece of the pie shrank. They made up 36.1% of investor purchases in the third quarter, a record low and down from 47% a year earlier. High-priced homes made up 30.8% of investor purchases, down slightly from 32.3% one year earlier.
However, mid-priced homes were a record one-third (33%) of investor purchases, up from 20.8% year-to-year, the first quarter on record where mid-priced homes represented a larger share of investor purchases than high-priced homes.
Investors were also more likely to purchase homes with high heat, drought and flood risk in the third quarter.
In Atlanta, investors bought almost 1 out of 3 homes (32%) in the third quarter. Next in the “top for investors” list was Phoenix (31.7%), Charlotte, NC (31.5%), Jacksonville (28.3%) and Miami (28.1%).
Atlanta also saw the biggest year-over-year gain. One year earlier, investors bought only 12.9% of homes. The second-biggest jump was in Charlotte (+18.2 ppts), followed by Phoenix (17.7 ppts), Jacksonville (+15.2 ppts) and Las Vegas (+14.6 ppts).
Source: (DECEMBER 2, 2021)