Real Estate Investor Activity Down in Q4

According to a new Fall 2023 Investment Article by Hannah Jones of Realtor.com, investor activity cooled late last year amid high prices elevated mortgage rates and falling rents. 

According to Realtor.com, investor market share fell relative to the previous year from February through August of 2023 but increased year-over-year in September 2023. 

Looking at the big picture, investors scooped up 10.8% of homes sold in the first three quarters of 2023, down 12% from the previous year. 

In January 2022, investors scooped up an average of 12% of homes during the month, up 2.9% percentage points from the same period in 2021. By January through September 2023, this share fell to an average of 10.8% lower than the previous year but still higher than pre-pandemic levels. 

The share of investor-buyers climbed steadily year-over-year from March 2021 to December 2022; peaking in February 2022 at 13.1% of buyers. The annual decline in buyer share picked up steam from February through May 2023 before the gap started to narrow and turn positive, reaching a 0.7 percentage point higher share of investors in September 2023 relative to the previous year. Housing demand and inventory fell off significantly in this time frame as mortgage rates climbed. Home prices remained high due to scarce inventory conditions, cutting into any potential upside for investors, and resulting in some pullback in investing activity. 

Overall, investor purchases fell an average of 32.9% year-to-date in September compared to the previous year. The decline in investor purchases fell more severely than overall sales, which fell an average 25.0% year-over-year in the same timeframe. 

Since Realtor.com’s last update, investor activity has fallen off but remained at a higher share of overall purchases than was seen before the pandemic some four years ago. 

While overall home sales fell 16.3% year-over-year in 2022, investor purchases picked up 4.1%, reaching an average of 11.8% of all purchases, a share 2.3 percentage points higher than the previous year. However, as home prices continued to climb and mortgage rates reached above 7% in 2023, investor purchases fell sharply, dropping 33.0% year-over-year in January through September, while overall home purchases fell just 25.0%. Investor purchase share fell 1.2 percentage points to 10.8% compared to the same time period the previous year. 

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