Investor Home Purchases Collapse Most On Record - oh well there goes the neighborhood

[Account Closed]

Investor Home Purchases Collapse Most On Record

https://www.zerohedge.com/mark...

THURSDAY, JUN 01, 2023 - 05:00 PM

Residential real estate brokerage firm Redfin released new data that revealed a record-breaking drop in homes purchased by investors in the first quarter. This sharp decline is due to a combination of elevated interest rates and sliding home prices, which impacts potential future returns. With investors retreating to the sidelines, buyers in the market have dramatically shrunk, and price wars have eased.

Redfin data shows investors purchased 48.6% fewer homes in the first quarter compared with the same period last year. This was the most significant plunge on record.

To illustrate just how the Federal Reserve's 14 months of aggressive interest hikes have chilled a major buyer of the residential real estate market, Redfin shows the record-breaking pullback in the chart below:

The brokerage said the investors still in the market have shifted to buying or flipping more affordable properties due to tightening credit conditions. Getting financing for lower-priced homes is easier, and there's more demand. Low-priced home purchases surged to a two-year high, and a record 41.1% of investor purchases in the quarter were starter homes.

[Carlos Ptriawan]

Quote from @Account Closed:

Quote from @Nicholas L.:

@Account Closed

what are your thoughts?  if I read the actual article... it also says this:

"Investors made up 17.6% of the market in the first quarter, down from 20.4% a year earlier. Still, the investor share of purchased homes is near record levels."

so... still a lot of investor purchases?

I think what they are trying to say is that overall purchases are down. Investors have moved to less expensive properties.

But, as a percentage (not total numbers) of that lower number of actual purchases, investors are buying more as a percentage at the lower cost properties than when they were buying higher cost properties. It's a niche statement that really doesn't explain very much.

If investors went from purchasing 20.4% down to 17.6% of purchases, in a declining market, I get the take that a lot of investors have moved to the sidelines.

 The above chart is misleading a bit. Because that's YoY growth LOL. What really matter is absolute number, which is from 20-ish move to 17-ish, it's only reduced 10% and pretty much expected. I was expecting like 5% only, but with 17%, investor activity is still very strong. And this activity, is actualy driving up the price of lower priced home in CF market. 

As summary:
OO Primary buyer is still increasing the house price ; while investor activity is increasing price in local CF market.