Big SFR Investors Flee Market While Smaller Ones Step Up
CoreLogic showed Q3 improved after hefty declines in first half of 2023.
Be cautious about reading into CoreLogic’s recent quarterly report about the investor share of single-family home purchases – which showed a bounce back from most of the year – as it doesn’t seem on track to reach its previous high, an analyst concludes.
It did increase by 5 percentage points from Q2 to Q3, and purchase levels remained steady at around 100,000 units per month, “suggesting that the Q2 decline has flattened,” writes CoreLogic economist Thomas Malone.
It had fallen from 28% in February to 21% in June but increased in every month of Q3 to reach 26% in September.
That said, “the investor share shows only the level of activity compared with non-investor purchases,” countered Malone.
In July, August and September 2022, investors made 107,000, 114,000 and 98,000 purchases, respectively. All three of these numbers are year-over-year decreases of more than 20%, CoreLogic reported.
Mega-Investors’ Decline Most Notable
Looking at investment purchasers by size, Malone said, the most notable shift was in the decline of mega-investors (those with 101 to 1,000 properties), who made up 15% of investor purchases in June and 11% in September.
He said big investors are leaving the market quickly and small investors (those who own fewer than 10 properties) pushed the investor share back up in Q3, from 44% of purchases in June to 49% in September.
Medium investors (those with 11 to 100 properties) accounted for 33% of investor home purchases.
Large investors (those with 101 to 1,000 properties) represented 8% of all purchases within that category.
About ‘Flippers’ and iBuyers
Malone said it’s doubtful that flippers will become more active in the coming months because the current climate suggests they’d face an uphill battle.
Additionally, iBuyers have still not resold many of the homes they bought; more than half their purchases in June were resold, “a symptom of a slowing market and a clear sign that these types of investors are not likely to increase their presence anytime soon.”