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Investor purchases increased for the first time in 2 years during Q1

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Real estate investors bought roughly 44,000 homes during the first quarter of 2024, a 0.5 percent uptick from a year ago.

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Investor home purchases climbed during the first quarter of 2024 — the first uptick recorded in two years, according to a new report.

Real estate investors bought roughly 44,000 homes during the first quarter of 2024, according to a report released Thursday by Redfin — just a 0.5 percent uptick from the first quarter of 2023, but the first annual uptick in investor purchases recorded since the first quarter of 2022.

Overall, investors bought 19 percent of all homes sold during the first quarter, according to Redfin data, the highest share in almost two years and an increase from 17.9 percent a year before. The rate remains less than during the pandemic market but is still high when compared to pre-pandemic years.

The main reason for the increase, according to Redfin, is that investors are making more money than they were a year ago. The typical home sold by an investor in March 2024 went for 55 percent more than it was purchased for — up from 46.3 percent in March 2023. Investor purchases were also at a low point during the first quarter of 2023, part of the reason they are rising now.

“Investor activity is steady,” Dallas Redfin Premier agent Connie Durnal said in the report. “When home prices got crazy high during the pandemic, investors sold out. But several months ago, they started to ramp back up. I’m not seeing a lot of home flippers in our market, but there are a lot of investors looking for single-family homes to rent out, which are in short supply.”

Investors are purchasing more single-family homes than any other property type, the report found. Investor purchases of single-family homes increased 3.9 percent year over year in the first quarter, the first annual increase in nearly two years, while investor purchases of townhomes, condos/co-ops and multifamily properties fell 8.6 percent from the first quarter of 2023. The report theorizes that investor purchases of single-family homes have remained strong because of the strong rent growth in that sector, meaning more return on investment.

Single-family properties represented 68.9 percent of investor purchases during the first quarter, the highest percentage since mid-2022. Condos and co-ops made up 18.7 percent of purchases, townhouses made up 7.2 percent and multifamily properties made up 5.3 percent — all down from a year earlier.

The rise in housing prices has affected investors, too, with investors paying more for homes than they did a few years earlier. The typical home purchased by investors in the first quarter cost $464,560 — up 9.2 percent from a year ago, according to the report.

California markets saw the biggest increase in investor activity, with investor home purchases soaring 27.8 percent year over year in San Jose and 22 percent in Oakland, followed by 21.6 percent in Minneapolis, 20.1 percent in Sacramento and 18.5 percent in San Francisco.

Purchases fell sharply in relatively affordable markets, dropping 22.1 percent in Cincinnati, 22 percent in Baltimore and 20.2 percent in Providence, Rhode Island.

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