Real estate investors were responsible for 18.2% of the homes purchased in the U.S. during the third quarter of this year — a record-high share, according to Redfin.
This new all-time high was up from a revised share of 16.1% in second-quarter 2021 and 11.2% in third-quarter 2020. The year-over-year jump as of Q3 2021 was the second-largest annualized increase ever recorded by Redfin. And the total number of homes bought by investors in Q3 —90,215 — also is a new record, as is the $63.6 billion dollar volume spent by investors to buy these homes, up from a revised total of $58.8 billion in Q2 2021 and up from $35.7 billion in Q3 2020.
With U.S. home prices continuing to soar, the typical purchase price for a home bought by an investor in Q3 2021 was $438,770, up 5.3% year over year.
“Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits,” said Sheharyar Bokhari, senior economist at Redfin. “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.”
Slightly more than three in four (76.8%) of homes bought by investors were paid in cash in the third quarter, highlighting another challenge the investor-rich marketplace has raised for regular buyers.
“With cash-rich investors taking the housing market by storm, many individual homebuyers have found it tough to compete,” Bokhari said, adding that there’s hope on the horizon for consumer-purpose buyers.
“The good news for those buyers is that the housing market has started to cool,” he said. “Bidding wars are on the decline, and if home-price growth continues to ease, we may see investors slow their roll.”