25 Markets Where Investors are Active
Investors kept up their steady pace of home purchases in the first three months of 2022, although they're buying fewer homes now than they have through most of the Covid-19 pandemic.
Seattle-based Redfin Corp. (NASDAQ: RDFN) found 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 Q3 2021. But investor purchases made up a larger share of the housing market in Q1, owing to an overall decrease in home purchases nationally.
Still, many U.S. metro areas remain targets for investors, especially hot Sun Belt cities that've posted material rent gains. Those markets also happen to be the most competitive for owner-occupiers.
Investor purchases of homes in Denver were down 24.7% in Q1 2022, compared to the same quarter a year prior, while investor purchases were up 17% year over year, Redfin reported. While the median sale price of investor-purchased Denver homes in Q1 2022 reached $535,850, a total of $1.16 billion was invested in homes during the first quarter.
Only a few cities analyzed by Redfin saw larger drops in investor purchases quarter over quarter: Atlanta (-24.7%), Milwaukee (-26.7%), Portland (-28.1%) and Minneapolis (-30.3%).
Investors made up 17.1% of the homes bought in Denver during the first quarter of 2022, a 2.9% jump from Q1 2021, Redfin reported.
Redfin looked at 40 large metro areas for its analysis, applying the term "investor" to any purchasing entity containing LLC, Inc., Trust, Corp. or Homes in its name. The data doesn't include notable metro areas, such as major Texas cities, because of sales-price nondisclosures in certain counties.
It's possible investors will buy fewer homes as interest rates continue to climb.
Institutional investors typically have the capital on hand to make cash offers, often out-competing individual homebuyers. That can have a dramatic impact on the market in places like Denver, where the median price of homes is up 12.3% compared to last year and may hit an average price of $1 million soon.
Data for institutional investor activity wasn't available for every U.S. metropolitan statistical area but MSAs that include Port St. Lucie, Florida; Virginia Beach-Norfolk-Newport News, Virginia; New York-Newark-Jersey City, New Jersey; Knoxville, Tennessee; Miami-Fort Lauderdale-West Palm Beach, Florida; and Washington-Arlington-Alexandria, Virginia, all posted more than 60% annual declines in the share of institutional investors purchasing homes in Q1.
Port St. Lucie saw the biggest decline, 70%, in institutional investor activity among markets tracked by Irvine, California-based Attom Data Solutions LLC, from 9.9% of all home sales in Q1 2021 to 3% in Q1 2022.
A few saw a notable uptick, though, including Charleston-North Charleston, South Carolina; Las Vegas-Henderson-Paradise, Nevada; and Winston-Salem, North Carolina, all of which saw a 60% annual increase in the share of institutional investors buying homes in the first quarter.
The share of institutional investors' home purchases in Charleston grew the most — more than doubling from 3.2% of home purchases in Q1 2021 to 6.8% in Q1 2022.