US Real Estate Investors Stage a Comeback: Unpacking the 2024 Trends

home buyingImage via Pixabay

SEATTLE, WA — Investor activity is showing signs of stabilization in the unpredictable US housing market, according to a new report from Redfin, a technology-powered real estate brokerage. The information reveals that around 44,000 homes were purchased by real estate investors in the first quarter of 2024, a tiny lift of 0.5% from the previous year.

This uptick is the first of its kind since mid-2022, suggesting investors could be regaining their confidence as housing prices and rents begin a positive incline. The real estate market has been quite the rollercoaster ride over the past few years. During the pandemic homebuying surge in 2021, investor home purchases more than doubled, only to tumble nearly 50% by the start of 2023 due to declining rents and home values.

Luckily, the potential profits for investors are looking up. The average home sold by an investor in March fetched 55.2% more than its original purchase price, an increase from 46.3% a year earlier. Meanwhile, only a tiny 5.3% of homes experienced a loss when sold, a significant dip from the 13.7% rate seen in March 2023.

Redfin’s data also suggest that investors are snapping up a high share of available homes, despite the slow market when compared to the homebuying frenzy seen during the pandemic. They purchased 18.7% of US homes sold in the first quarter, a relatively high figure considering the overall decline in home purchases by 3.9% from a year earlier.

Interestingly, it appears that investors are on the prowl for single-family homes, with purchases escalating 3.9% year over year. According to Dallas Redfin Premier agent Connie Durnal, investors are particularly interested in single-family homes for rent. On the other hand, the purchases of townhouses, condos/co-ops, and multifamily properties experienced a downswing.

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The dynamics of property purchases seem to be changing. New Jersey’s Amira Elgoneimy, a Redfin Premier real estate agent, observes a shift in favor of individual buyers in bidding wars as they are often willing to outbid investors who need to keep an eye on their profit margins.

The preference for single-family homes by investors has led to an uptick in purchases of more expensive homes. The first quarter saw a 10.5% rise in the buying of high-priced homes by investors, while purchases of mid-priced homes escalated by 4.7%. However, investor purchases of low-priced homes dipped by 6.5%.

California, particularly San Jose, saw the most substantial increase in investor home purchases, at 27.8% year over year. Metropolitan areas such as Oakland, Minneapolis, Sacramento, and San Francisco also witnessed noteworthy growth.

For the average American homeowner, these statistics and trends reveal the changing dynamics of the housing market and the increasing influence of investors across various property types. While competition with investors can sometimes make it tougher for individual buyers to land a home, the broader stabilizing trend may bring more opportunities for potential homeowners in the coming months.

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