Investors acquire record over 90,000 homes in third quarter

Eagle-eyed real estate investors betting on continued housing shortages in the United States set a third quarter record, as Redfin reports that investors accounted for a record 18.2% of US homes bought, compared to a revised rate of 16.1% in the second quarter of 2021 and 11.2% year-on-year.

In total, investors bought 90,215 homes in the third quarter, worth $ 63.6 billion in homes, setting a new record for this measure, up 10.1% from the second quarter and 80% , 2% year-on-year. The median-priced home cost $ 438,770, 5.3% more than in the third quarter of 2020.

Redfin said 76.8% of investor home purchases in the third quarter were paid in cash.

“Rising house prices fueled by an intense housing shortage has created opportunities for investors to reap big profits,” said Redfin’s senior economist. Sheharyar Bokhari. “These same factors have driven more Americans to rent, which also creates opportunities for investors, as investors typically turn the homes they buy into rentals and can now charge higher rents.”

People excluded from the buying market have had to turn to renting for their housing needs as the average monthly cost of rent increased 10.7% year-on-year in September 2021, the fastest growth since August 2021. less two years, while the median home selling price rose 13.9%.

“With cash-rich investors storming the housing market, many individual buyers are struggling to compete,” Bokhari said. “The good news for these buyers is that the real estate market has started to cool down. The bidding wars are on the decline, and if home price growth continues to slow, we could see investors slowing their pace.”

By home type, single-family homes accounted for 74.4% of all investor purchases in the third quarter, the highest level recorded by Redfin, down from 70.6% a year earlier. Condominiums and co-ops accounted for 16.9% of all investor purchases, a record low and down from 19.8% in the second quarter of 2020. Townhouses and multi-family dwellings respectively accounted for 5.4 % and 3.4% of investor purchases a year earlier.

Redfin recently reported that a growing number of inquiries are coming from potential buyers curious about a region’s climate and flood and fire risks, and how these tangibles are factored into insurance costs.

In the third quarter, 65.2% of homes bought by investors were at high risk of heat, while 64.3% were at high risk of a storm. Meanwhile, 27.1% were at high risk of drought, 22.2% at high risk of flooding, and 3% at high risk of fire. Redfin noted that these percentages did not add up to 100% because it is possible that homes face more than one climate risk.

Feeding on climate-related data, investors targeted the Atlanta area in Q3 as 32% of homes sold in Q3 were bought by this buyer – the highest share of 40 US metropolitan areas analyzed by Redfin. – followed by Phoenix with 31.7%. ; Charlotte, North Carolina at 31.5%; Jacksonville, Florida at 28.3%; and Miami at 28.1%.

At the other extreme, cooler climate regions such as Providence, Rhode Island reported that investors bought only 5.4% of homes sold, a lower share than any other metro in this analysis, followed Montgomery County, Pa. (7.1%); Virginia Beach, Virginia (7.1%); Washington, DC (7.2%); and Warren, Michigan (7.4%).

Click here for more on Redfin’s analysis of Q3 investor purchases.

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