Property Investors Are Buying Up Big

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The number of real estate investors purchasing homes across the U.S. continues to increase as prices rise and inventories remain low.

Redfin reports that real estate investors bought a record 18% of the U.S. homes that sold in Q3 2021, up from a 16.2% gain in Q2 and well above the 11.3% rise from Q3 2020. Investors bought a record 90,215 homes in Q3.

“Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits,” said Redfin Senior Economist Sheharyar Bokhari. “Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn the homes they purchase into rentals and can now charge higher rents.”

Investors bought more than 90,000 homes in the three months through September, up 10% from the prior quarter and 80% from a year earlier. Low interest rates and a persistent shortage of affordable properties have pushed investors to stomach higher prices as they bank on rent growth and price appreciation.

The record surge of capital into the housing market comes as soaring home prices have made it harder for many families to buy a house.

Investors have typically focused on lower-priced homes, but in the third-quarter they ramped up their purchases of higher-end properties, reflecting increased competition and confidence that the housing boom will continue.

The median price of investor purchases was $438,770, the highest on record. Three quarters of the homes were single-family residences, while the balance was a combination of condominiums, co-ops and other property types.

For the purposes of the report, Redfin defined investors as any buyer whose name included “LLC,” “Inc.,” “Corp.” or other keywords that indicate professional ownership.