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Are Real Estate Investors Feeling the Squeeze of the Housing Market?

Data from New Western, a private real estate investment marketplace, found that investors are capitalizing during an up-and-down housing market.

The two regions with the most growth in Q1 2023 from Q4 2022 were the Midwest and the West. Respectively, those regions saw increases of 49% and 24%. New Western’s marketplace supplies properties to the largest segment of independent investors in the nation, owning 82% of the market share.

The Southeast and Midwest regions were identified as areas of expansion, according to New Western, as both saw increases during Q1 2023. The South region also reported growth of 16% quarter-to-quarter.

"Our non-traditional approach to residential real estate investing allows us to roll with the same punches that have knocked out bigger players," said Kurt Carlton, Co-Founder and President of New Western. "The U.S. housing market is experiencing a supply shortage. In fact, the gap between family formation and single family homes totals as high as six-and-a-half million by some accounts from 2012 to 2022. As our investor purchases rise, independent flippers are not only making a profit but also putting a much needed category of homes back into inventory. The Midwest and West are attractive growth markets and we're excited to see this momentum continue throughout the year.”

Institutional buyers and iBuyers had been struggling in the current market, with New Western reported a dip of 80% from Q4 2021 to Q4 2022. New Western, however, is reported growth and activity in its 150,000-plus investors.

A few of the market New Western is seeing significant increases include: 

  1. Salt Lake City, Utah
  2. St. Louis, Missouri
  3. Washington D.C.
  4. Greensboro, North Carolina
  5. Seattle, Washington 

The National Association of Realtors (NAR) reported earlier this month in its New Homes Sales Report for April that existing homes, which includes single-family homes, townhomes, condos, and co-ops, fell 3.4% from March to a seasonally adjusted annual rate of 4.28 million units. Year-over-year, sales slumped 23.2% (down from 5.57 million in April 2022).

Additionally, individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in April, identical to March and one year ago.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.35% as of May 11. That's down from 6.39% the previous week, but up from 5.30% one year ago.

Single-family home sales slipped to a seasonally adjusted annual rate of 3.85 million in April, down 3.5% from 3.99 million in March and 22.4% year-over-year. The median existing single-family home price was $393,300 in April, down 2.1% year-over-year.

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.

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