A new report on investor activity in the home-buying market is showing some surprising, as well as not-so-surprising, trends over the last decade, as the proportion and type of investors putting their money in residential real estate has evolved significantly since spiking after the 2006 crash.
Released Mon., Aug. 30, the CoreLogic Investor Home-Buying report looked at a period from 2011 to 2020, and found overall investor participation in the market peaked in 2017, when 17% of all home purchases were made by investors.
But between 2017 and 2020, investor activity dropped down to 15.5% overall.
The report did not look at data from 2021—though an earlier CoreLogic analysis found a “moderate” correlation between investor activity and market velocity (how fast homes are selling), meaning that number could be back on the rise.
“Although investors seem to have given some of their coveted market share to buyers, it’s hard to say how long this trend will last—or what the long-term implications will be on a larger scale,” said Molly Boesel, principal economist at CoreLogic, in a statement.
Who and Where?
Despite the overall drop, small investors actually increased their stake in home-buying and now make up “a more significant share” of the market than at any time in history, the report said.
The report attributed this trend to investors moving toward smaller, more affordable markets and out of increasingly expensive areas like the West Coast and the Northeast. All investors, in fact, are pulling out of these markets, with California—a state that held seven of the top ten cities for investor activity in 2011—not placing a single city on that list in 2020.
Areas that are seeing increased investor interest include the Mountain West in cities like Boise, Idaho, and Phoenix, Arizona, and in the South where populations are growing but home prices are much lower.
Boesel said the current market is at a “critical juncture,” and these trends are likely to keep evolving depending on the direction of both the market and the pandemic.
“hen the hot housing market cools down, we may see investor activity increase as they try to buy more property at lower prices,” she said.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.
