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Fla.’s Investors Pull Back in 1Q 2022

Fla. has 4 of the top 10 cities for real estate investors, but they’re pulling back. U.S. investor purchases dropped 11.5% in 1Q 2022 compared to the previous quarter.

SEATTLE – The number of homes purchased by real estate investors in the first quarter declined 11.5% from the quarter before – and 16.5% from the third quarter of 2021, when investor purchases hit a record high, according to a report from Redfin.

Investor purchases still remain above pre-pandemic levels, and investors buy a larger share of America’s homes than ever before – a record 20% of homes sold in the first quarter, up from 19.2% one quarter earlier and 15.3% one year earlier. While total home sales declined, investors’ share remained strong.

In Florida, four cities made Redfin’s top-10 list for investors, but those also saw a quarter-to-quarter decline in 2022’s first quarter.

Share of homes purchased by investors in 1Q 2022

  1. 33.1%: Atlanta – down 25.3% quarter-to-quarter
  2. 32.3%: Jacksonville – down 21.7%
  3. 32.2%: Charlotte, N.C. – down 19.1%
  4. 29.0%: Phoenix – down 8.6%
  5. 28.2%: Miami – down 3.6%
  6. 26.8%: Las Vegas – down 16.5%
  7. 25.7%: Orlando – down 12.9%
  8. 24.7%: Tampa – down 16.5%
  9. 24.6%: Nashville – down 16.5%
  10. 22.8%: Columbus, Ohio – down 20.5%

The analysis is based on county records across 40 of the most populous U.S. metropolitan areas and defines an investor as a buyer whose name includes at least one of the following keywords: LLC, Inc., Trust, Corp or Homes.

“Investor home purchases are falling for the same reason overall home purchases are falling: Surging interest rates and high housing prices have made it more expensive to get a mortgage and buy a home,” says Redfin Senior Economist Sheharyar Bokhari.

“The fact that investors are still able to grow their market share while buying fewer homes signals they’re not feeling the pain of higher interest rates as intensely as individual buyers, many of whom are getting priced out of the housing market altogether,” Bokhari says. “It also indicates that the individuals who can still afford to buy will continue to face competition from investors.”

Until the end of 2021, investor purchases climbed steadily since the pandemic’s start, in defiance of normal seasonality, while overall sales still reacted to seasonal trends.

Even with the current decline investor purchases remain strong, in part because they can rent out the homes and cash in on soaring rents. Demand for rentals remains high because there aren’t enough homes for sale.

“Investors are on the hunt for deals” and pulling back from the market hoping prices will drop, says Jennifer Bowers, a Redfin agent in Nashville. “Plus, they bought so many houses at the height of the pandemic that some amount of pullback is natural. A few months ago, 95% of homes for sale in Nashville would get at least one cash offer from an investor – one of my listings got eight. Today, most homes aren’t getting any.”

© 2022 Florida Realtors®