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Investor activity in housing market still high

iBuyer selling activity increased 186% year over year in April

After scooping up a record share of inventory in February 2022 (9.7%), investor activity cooled slightly this spring, as investors purchased 9.5% of all homes sold in April 2022, up 2.8 percentage points from a year ago, according to a new report from Realtor.com.

In April 2015, the investor share of home purchases was 4.8%. April’s dip in investor share growth is the first such decrease after 19 consecutive months of increase.

The study attributes the high share of investor home purchases to growth in investor purchase activity and a decrease in non-investor activity, as home prices continued to increase and mortgage rates rose.

Realtor.com’s data is based off an analysis of 263 metropolitan areas, and it reflects investor purchases under a corporation or company name. Small investor activity occurring under individual names is not included. The study defines “large investors” as those who have purchased more than 50 homes since the site began tracking investor activity in 2001, while “small investors” are defined as those who have purchased 10 or fewer homes during the same time period.

Of the homes purchased by investors in April, 35% were bought by large investors, up from 28% a year ago, but down from 42% recorded in August 2021.

According to Realtor.com, investors bought 7,800 more homes than they sold in April. This is down from an all-time high of 14,000 more homes bought than sold in August 2021, but up from the 2,300-home gap in February 2022. Despite this gap, investor selling activity was up 24% compared to a year prior and 28% above April 2019.

The study notes, however, that iBuyers have recently become net sellers of real estate. In April, iBuyers increased their sales of homes by 186% year over year, resulting in the iBuyers selling 1,600 more homes than they purchased I the month. Non-iBuyer investors, on the other hand, increased their selling by just 13%.

Since reaching a high of 78% in September 2021, the share of all-cash investor purchases has declined, even as mortgage rates have risen. In April, the cash-to-mortgage ratio was 3:1, but that will likely change as mortgage rates continue to climb.

Investor purchase activity was highest in the South in April, with investors purchasing 6.6% of homes sold. The Midwest (5.9%) had the second highest share, followed by the West (4.6%) and the Northeast (5.9%). The South also saw the greatest growth in investor purchase activity in the last 12 months, with a 3.0% increase.

Of the 263 metro areas analyzed, Charlotte-Concord-Gastonia, North Carolina-South Carolina, saw the largest share of homes purchased by investors for the 12 months ending April 2022, with 20% of homes sold going to investors. Branson, Missouri (19.5%); Birmingham-Hoover, Alabama (18.9%); Summit Park, Utah; and Memphis, Tennessee (18.5) rounded out the top five metros with the most investor activity. Nationwide, the median purchase price by investors in April was $295,000, roughly 15% less than the overall median sales price for the month and 10% less than the median home sold by investors.

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