Investor Home Purchases Surge for First Time in Two Years: Impact on Buyers

Published by CNBC | June 4, 2024

Real estate investor activity jumped 0.5% from a year ago, according to Redfin - the first increase in activity since mid-2022

Consumers confronted with high housing prices sometimes point to private equity when buying homes as a contributing factor. However, experts say that while the housing market has multiple issues, it’s hard to determine if real estate investor activity is truly deterring people from becoming homeowners across the U.S.

Real estate investors purchased about 44,000 U.S. homes in the first quarter of 2024, up 0.5% from a year ago, according to Redfin, a real estate brokerage site. It’s the first increase since the second quarter of 2022.

The data tracks investor activity, which includes people or entities buying properties to sell or rent, without intending to live there themselves.

What an investor home purchase means

In this context, investors are defined as any institution or business that purchases residential real estate, according to Redfin. Investor purchases typically reflect buyers who are purchasing a home using a limited liability company, or LLC, another form of company or a trust, and are typically buying the home to generate income or a profit. Some intend to use the house as a part-time residence or vacation home.

Investor share refers to the portion of homes purchased by investors over a certain period, said Chen Zhao, senior economist at Redfin.

In the first quarter of 2024, the share of homes purchased by investors was 19%, according to Redfin.

“That implies that around 81% of homes, by our measurement, are being purchased by people who are not investors, so they’re probably buying their homes to make them their primary residence,” said Zhao.

Institutional operators, or real estate investors who own at least 1,000 single-family homes, own about 1% of the total housing stock in the U.S., according to an analysis from research site ResiClub, based on data from Parcl Labs, a real estate data firm.

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