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Investors are buying more, but spending less

Investor purchases account for over 15% of all purchases so far in 2021

Real estate investors are buying more properties, but paying less for them, according to a report from RealtyTrac released Thursday based on ATTOM Data Solutions home sales data.

In the second quarter of 2021, investor purchases accounted for 15.4% of all home purchases nationwide, compared with 11.5% of all home purchases a year prior. Despite such a large year-over-year change, it is still slightly lower than Q1 2021, in which investors held 15.9% of the market.

“Historically, investors have always accounted for somewhere between 10% and 15% of residential home purchases, and our data shows that this is still the case today, albeit at the high end of that range,” Rick Sharga, the executive vice president of RealtyTrac, said in a statement. “But the data doesn’t support the ‘Wall Street is buying up Main Street’ theme that’s been a popular theory for the past year or so.”

By state, the share of investor purchases among all home sales increased year-over-year in Q2 2021 in all state and Washington, D.C. except for Alaska, Louisiana, Maryland, Nebraska, Vermont and West Virginia. States where investors held the largest share of the market include: New Hampshire (23.2%), Delaware (23%), Georgia (22.9%), Arizona (20.8%), and Mississippi (20.1%).

On the other side, the states with the lowest level of investor share for Q2 2021 were Oregon (8.5%), West Virginia (8.7%), Wyoming (9.4%), Washington (10.2%), and Iowa (11.2%).

In addition to occupying a larger share of the market, the data shows that investors across the country paid an average of 29.4% less than consumers in the second quarter of 2021, with a median purchase price of $205,000 for investors compared to $290,230 for all home purchases.

In all but five states (Vermont, California, Massachusetts, Washington and Nevada), investors paid less than the state median sale price. Investors saw the largest purchase discounts for the second quarter of 2021 in Arkansas (76.9% discount), Michigan (60.0% discount), Louisiana (55.5% discount), Nebraska (55% discount), and West Virginia (51.0% discount), according to RealtyTrac.

“Another misconception is that investors are overpaying for properties, making it difficult for consumers to compete and artificially driving up prices,” Sharga said in a statement. “But successful investors tend to look for below-market pricing in order to make a profit on their purchases. And many of them buy properties with cash, which gives them a chance to get properties at a discount.”

In Q2 2021, 79% of all investor purchases were cash sales compared to 69% a year prior. In total, cash purchases accounted for more than 50% of all investor purchases in every state, including the District of Columbia, except for Alaska in the second quarter of 2021. A year ago, 10 states were below the 50% cash purchase threshold.

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