Investor share of single-family home purchases down in Q2

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single-family home purchases

A new report from CoreLogic notes that the share of single-family homes purchased by investors fell from a high of 28 percent in February 2022 to 20 percent in June. While this is a significant decline, the investor market share is up from a low point of a 14 percent reached in the early days of the COVID pandemic in 2020.

A cyclical market, or not

Data presented by CoreLogic show the strong seasonal nature of single-family home purchase activity by non-investors. It is very common for the monthly non-investor purchases of single-family homes to be 50 percent higher in the summer months than in January and February. Purchases by investors are much less seasonal. The result is that investor market share tends to be higher in the winter months, due as much to the decline in non-investors purchases during these months as to any increase in investor purchases.

The recent decline in investor share of the single-family home market is due to both the seasonal rise in purchases by non-investors and to a decline in purchases by investors. The report speculates that the decline may be due to investors being more sensitive to the recent rise in interest rates than are non-investor purchasers, but makes clear that this is conjecture at this point.

The myth of the mega investor

While there has been concern expressed recently over large institutional investors like Blackrock buying up single-family homes, the CoreLogic report finds that the majority of investors in single-family homes are small owners. The report notes that 48 percent of the single-family homes purchased by investors in June were bought by investors who own 10 or fewer properties. Investors who own 11 to 100 properties bought another 28 percent of the single-family homes bought by investors in June. Mega-investors who own 1,000 or more homes accounted for only 14 percent of investor purchases in June.

What may be of concern to those interested in housing affordability is that investors are most active in the market for low-priced homes. Investors purchased 28 percent of those homes in June while they only purchased 15 percent of high-priced homes.

Top metros for investor purchases of single-family homes in Q2 were Atlanta, Phoenix, Las Vegas and Memphis. In each of these markets, mega-investors were over represented and small investors were under represented compared to their shares of the single-family home purchase market nationally.

Looking for flippers

CoreLogic reported that the portion of investor-purchased single-family homes that were resold within 6 months has varied between 13 percent and 18 percent since January 2019. As of June 2022, 17 percent of home that had been purchased in December 2021 had been resold.

The full report is available here.