Realtor.com® Investor Report: Large Investor Activity Wanes, Overall Investor Share Remains High

Spring 2023 Investor Report:

• Investor market share remains high. In December 2022, investors purchased 8.2% of homes sold during the month, up 0.4 percentage points from the same time in 2021, but down from the February 2022 peak (8.9%).
• Early in the pandemic-era boom, as housing demand skyrocketed and rents increased, larger investors edged out smaller investors, growing their share of investment purchases from 16.7% in July 2020 to a high of 31.8% in June 2022. Since then, the trend has shifted back towards smaller investors.
• While investors are buying close to a historically high share of homes, net buying–the gap between their buying and selling of homes–was lower at the end of 2022 than at peak.
• In 2022, Southern metros experienced the greatest share of and growth in investor activity, followed by the Midwest.

Although Down from Recent Record, Investor Market Share Remains High

In December 2022, investors scooped up 8.2% of homes sold during the month, up 0.4 percentage points from the same time in 2021, setting the highest December share of investors on record. Investor buyer share has lost some ground from the recent record high of 8.9% in February 2022, but remains above pre-pandemic levels. Early in the pandemic, investors pulled back more than other home buyers, and their share of sales plummeted to a low of 4.3% in April 2020. Since that time, the share of investor purchased homes rose with few interruptions through the February 2022 peak. The share of investor purchases remained high (8.5%+) from January through June 2022 before falling as the economic outlook became more uncertain and fears of a possible recession loomed. However, the share climbed again from October to December 2022, reaching back up to 8.2%. The high share in the first half of 2022 was driven both by growth in investor purchase counts and a pullback from non-investor buyers, who purchased 16.6% fewer homes in 2022 compared to a year earlier, while investor purchases grew 6.4%. The yearly share growth has not yet declined, with investor buyer share still up 0.4 percentage points year-over-year in December 2022.

Investor Purchases Decline, but Later and Not By As Much as Overall Sales

Looking at counts, investor activity has been on a similar up and down trajectory as the broader market. After dropping in 2020 as a result of COVID-19 uncertainty and disruptions, investor home purchases grew 52.9% in 2021 more than making up for the pandemic interruption. In fact, purchases were up by 34.9% compared to 2019. Although overall home sales began to soften in Fall 2021, the number of investor purchases remained steadily higher than the previous year through May 2022 when growth rates began to shrink. In September 2022 there were fewer investor buyers than the prior year for the first time since the onset of the pandemic in April-June 2020. The count of investor purchases continued to slow, tumbling to 35.4% fewer year-over-year in December 2022. 

Non-investor sales started to fall off sooner and generally exceeded the rate of investor purchase declines through the end of 2022, which helped keep the share of investor purchased homes high. Of note, year-over-year declines in investor purchases did not begin until September 2022, while non-investor purchases started falling consistently compared to the previous year in March 2022. Across the full year, investor purchases increased by 6.4% year-over-year in 2022, while non-investor purchases fell 16.6%. Investor purchases surged in 2021 and into 2022, so compared to pre-pandemic (2019), sales by investors climbed 14.3% by 2022.

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By: Hannah Jones | Realtor.com \ May 22, 2023