Homebuyers are more likely than not to cross paths at open houses with investors today than at any other time in the past two decades. Investor purchases of existing homes hit 11.3% of all home sales in 2018, up from 11% in 2017 and up from 10.9% of all home sales during the flurry of investor activity from 2012-2014, according to CoreLogic.
What’s going on? Again according to CoreLogic, this increased investor activity is being generated by smaller investors, or “mom and pop” investors, who purchase 10 homes or less annually.
Compare the share of investor purchased homes in 2013 to 2018. In 2013, smaller investors bought 48% of all investor purchased homes. In 2018, smaller investors bought 60% of all investor purchased homes. Medium-sized investors, those buying 11-100 houses, had a market share of 22.7% in investor purchased homes whereas in 2010, they had a market share of 30%. Large investors who buy 101 homes or more now have a market share of 15.8% in investor purchased homes.
Clearly, purchase rates by investors are higher among starter homes. CoreLogic indicates that starter homes have a rate of purchase two – three times more than move-up or high-end homes.
The highest activity level of investor purchased homes occurred in the eastern part of the US during 2018. Take a look…
- Detroit – 27% of all home sales
- Philadelphia – 23.2% of all home sales
- Memphis – 19.7% of all home sales
- Long Island – 18.8% of all home sales
- Oklahoma City – 18.7%
- Atlanta – 18.5%
- Des Moines – 17.2%
- Baltimore – 17.2%
- Camden NJ – 16.7%
- Cleveland – 16.7%
The lowest activity level of investor purchased homes occurred in the West…
- Ventura – 4.8%
- Boise – 4.8%
- Oakland – 5.1%
- San Jose – 5.2%
- Sacramento – 5.2%
Other cities that generated little interest among investor purchasers included Elgin IL (5.4%), Frederick NY (5.6%), and Worchester MA (5.9%).
It goes without saying that housing markets that experience more active investors also experience an increased rate of selling.
