Real estate investors spent $63.6B to acquire 18.2% of all for-sale single-family homes in the US during Q3 2021.
Record High Number ofInvestor Acquisitions & Record High Investment Dollars Spent on US Homes in Q3 2021
Real estate investors opened their coffers wider than ever during Q3 2021 to buy more single-family homes. According to a new analysis by Redfin, investors purchased a record 18.2% of all for-sale homes in the US by spending a record high of $63.6B in Q3 2021.
(By the way, Redfin defined investors as “any institution or business that purchases residential real estate.”)
This record high of 18.2% of all homes purchased by investors during Q3 2021 was up from 16.1% during Q2 2021 and from 11.2% during Q3 2020. Obviously, Q3 2021’s investor market share surpassed pre-pandemic levels of investors’ involvement with the housing market.
All in all, investors acquired 90,215 homes during Q3 2021, an increase of +10.1% from Q2 2021 and a huge increase of +80.2% from Q3 2021. These 90,215 investor acquired homes represent the second-largest annual investor gain ever recorded.
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Money Specifics of Q3 2021 Investor Market Share
Typically, the price of homes acquired by investors during Q3 2021 came in at $438,770, an increase of +5.3% y/y.
In terms of dollar amounts, investors spent a record high of $63.3B to acquire single-family homes during Q3 2021, up from $58.6B in Q2 2021 and up from $35.7B in Q3 2020.
An eye-popping 76.8% of investor home purchases in Q3 were all-cash transactions.
Investors Expecting Big Returns
According to Redfin’s senior economist Sheharyar Bokhari, investors stand to gain big with these residential properties. “Increasing home prices fueled by an intense housing market have created opportunities for investors to reap big profits. Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn to homes they purchase into rentals and can now charge higher rents.”
Average monthly rent increased +10.7% y/y in September, the fastest rent rate increase in two years, and the median home sale price jumped +13.9%.
Investors Focused on Single-Family Home Purchases
74% of all investor purchases were single-family home purchases during Q3 2021. Condominium and co-op purchases accounted for just 16.9% of investor purchases, down from 19.8% in Q3 2020. Townhomes and multifamily housing represented just 5.4% and 3.4^ of investor purchases, respectively.
Investors also opened their eyes and wallets to purchase single-family homes in all price tiers during Q3 2021 were low-priced homes. Just 36.1% of investor acquisitions were low-priced homes. 30.8% of investor purchases were among high-prices homes and mid-priced home represented 33% of investor purchases. This Q3 2021 marked the first ever quarter in which mid-priced home reflected a larger proportion of investor acquisitions than high-priced homes.
Climate Change Risks Not An Issue for Investors
Investors did not consider high climate risk areas into their purchasing activities in Q3 2021. More than 65% of investor home purchases were in high heat risk areas and roughly 64% were properties that faced high storm risks. 27.1% of investor-acquired properties faced high drought risks, 22.22% faced high flood risk and roughly 3% faced high fire risk.
Where did Investors Buy?
Atlanta and Phoenix were the two favorite markets for investors during Q3 2021. Take a look at the top spots:
- Atlanta – 32% of all sales
- Phoenix – 31.7
- Charlotte – 31.5%
- Jacksonville – 28.3%
- Miami – 28.1%
Thanks to Redfin and Inman.
