It's no secret that rising prices and shrinking inventories make it difficult to successfully bid on a home. The news that investors are increasingly winning these bids shouldn't offer any comfort to frustrated homebuyers.
In the third quarter of 2021, investors bought more than 18 percent of homes sold in the United States – a total of about 90,000 homes for a total of about $ 64 billion. That's the highest percentage and number in any quarter since records began, according to a new report from Redfin.
"Investors have the advantage that they usually come with cash," said Daryl Fairweather, Redfin 's chief economist. “As a rule, they are willing to forego controls. An investor can offer more favorable conditions than an owner-occupier. "
The study also found that investors were buying more expensive homes than in the past; The average home purchase by an investor in the third quarter was $ 438,770, about 5 percent more than the average a year earlier. This means that investors benefit from higher middle-class rents that might have been easier to buy in another era.
“The people who own their homes these days have very good credit ratings. They put a lot of money down and people who don't get left out, ”observed Ms. Fairweather. "This gives investors the opportunity to buy houses and rent them back to exactly the people who would have wanted to buy them."
Increasing investor shares are nothing new. In the third quarter of 2000, investors only bought about 6 percent of the available apartments; At the beginning of 2020, shortly before the pandemic, their share peaked at 16.6 percent. After a pandemic crash, the share surged back to the current record of 18.2 percent, essentially catching up with the previous price of investor purchases.
To reach their conclusions, Redfin analysts searched sales records and deeds for keywords on behalf of buyers such as "LLC", "Inc", "Trust", "Association", "Company" and "Corporate Trustee". The study covered the 50 largest metropolitan areas in the United States, although only 40 could be used due to laws prohibiting access to records. This week's graph shows the 20 metropolitan areas where real estate purchases by investors have increased the most over the course of a year, according to the report.