Investors Are Slowing Their Home-Buying Spree

Apartment-dwelling millennials rejoice. At long last, institutional home real estate investors — the type of companies that have been upending house auctions and outbidding traditional home seekers in desirable neighborhoods near you — appear to be slowing their frenetic pandemic-era…

Brian Boyle
Sign up for insightful business news.

Apartment-dwelling millennials rejoice.

At long last, institutional home real estate investors — the type of companies that have been upending house auctions and outbidding traditional home seekers in desirable neighborhoods near you — appear to be slowing their frenetic pandemic-era shopping sprees, according to new data published by brokerage firm Redfin on Tuesday.

Live, Laugh, Love (Low-Interest Rates)

Institutional investors, including major firms like JPMorgan and Blackstone, have poured into the home-buying market since the beginning of the pandemic — particularly in newly-desired suburban markets — snapping up nearly 1 in 5 homes across the country in the first quarter of this year. In the process, they’ve become something of a scourge on local communities, driving up prices across the board.

After a few years of aggressive activity, the biggest players may have gotten out in front of their skis. Tricon Residential, Invitation Homes, and American Homes 4 Rent, three of the largest publicly traded owners, have underperformed the S&P 500 so far this year. Meanwhile, Redfin, Zillow, and Opendoor have each shuttered their algorithm-driven online home-flipping divisions this year.

Now, institutional investors are losing their greatest advantage: low-interest rates. Without access to cheap capital and with the overall housing market cooling, institutional investors are starting to feel less at home:

  • Investors purchased 60,000 homes across 40 markets tracked by Redfin during the third quarter, the brokerage firm reports. That’s down from a staggering 94,000 in the same quarter a year ago and, early pandemic aside, marks the largest investor purchase percentage decline since the subprime mortgage crisis.
  • The 30% decrease in investor purchases year-over-year slightly outpaces the drop in traditional homeowner sales during the third quarter, which fell 27%. Home prices were up 13% in August, the most recently available time period tracked by the S&P CoreLogic Case-Shiller national home price index.

Bring Down the House: Still, investors accounted for 17.5% of all home sales country-wide in the third quarter. That’s down from the nearly 20% high in recent years but remains higher than the 15% peak seen at any time pre-pandemic. For now, the odds are still pretty good you’ll be buying a housewarming gift for your new neighbor, Jamie Dimon.

Analysis more

Extra Credit: The Shifting World of Private Credit Markets

Tale of the Tape: Warren Buffett and Cathie Wood

Recent News

UK Opens Antitrust Investigation into Apple and Google

China Warns It Will Tightly Regulate Covid-Linked IPOs

Virgin Yanks Support For Heathrow Runway

Sponsor Data Startup Raises $35 Million in Venture Capital

[subscribe-form listid="1ebbb697aaa44fb1971fe0a3c42ff841" source="organic" medium="organic" redirect-url=""]
<form action="" class="subscribe-form "> <input type="text" name="subscribe_form_email" placeholder="Enter your email"> <input type="text" name="subscribe_form_name" placeholder="Enter your name" value="" class="c-subscribe-from_field"> <button class="c-btn" id="subscribe-form-submit" type="submit">Subscribe</button> <div class="subscribe-form-message"></div> <div class="subscribe-form-vars"> <input type="hidden" class="subscribe-form-param" name="params[listid]" value="1ebbb697aaa44fb1971fe0a3c42ff841"> <input type="hidden" class="subscribe-form-param" name="params[source]" value="organic"> <input type="hidden" class="subscribe-form-param" name="params[medium]" value="organic"> <input type="hidden" class="subscribe-form-param" name="params[redirect_url]" value=""> </div> </form>