Investor SFR Purchases Hit Record Levels In Q2

Investor home purchases hit record levels in the second quarter and have officially surpassed pandemic levels, with investors snapping up $49 billion in properties. 

A new report from Redfin shows that Q2 figures are up 15.1% over first quarter numbers and up a whopping 106.7% year-over-year. In Q1, real estate investors bought $38.9 billion in homes, and in the second quarter of last year, when the market stalled as the result of the COVID-19 pandemic, they purchased $20.9 billion.

Overall, investor market share is nearly at pre-pandemic levels, with investors buying one in six homes on the market in Q2. That figure is just below the record market share investors held immediately prior to the pandemic’s onset in Q1 2020.

“Investors see soaring home prices as an opportunity,” said Redfin Senior Economist Sheharyar Bokhari. “With housing values consistently on the rise, solid returns are pretty much guaranteed—especially when you’re an investor who has access to extremely cheap debt.”

The phenomenon is complicating an already-tight housing market for individual buyers. Nearly three-quarters of investor home deals in Q2 were all-cash transactions, the highest level Redfin recorded since 2018.

“With investors throwing money at the housing market, some homebuyers are finding it tough to compete,” Bokhari said. “Investors frequently pay with all cash, which means they often have a much higher chance of winning bidding wars than buyers who take out mortgages.”

Investors have typically gravitated toward multifamily buildings, but they’re increasingly turning to single-family homes—a trend that’s reflective of increased renter interest in SFRs during the pandemic. Investors bought 16.1% of single family homes and 15.1% of condos in Q2. 

Regionally, investors have the highest market share in Phoenix and Miami. In the Valley Of The Sun, nearly one-quarter of homes purchased in Q2 were bought by investors.