The large U.S. home investor share seen since 2019 has held steady in Q2 2023, according to a new report from CoreLogic.
CoreLogic’s report on the U.S. home investor share in Q2 found that investors accounted for 27% of all single-family home purchases in March 2023, and by June that number was almost unchanged at 26%.
The report also found that investor activity has declined slightly since early 2023, but there is still no sign that the share will fall back to its pre-pandemic level soon. Seasonality is the most likely reason for the small drop in home investor purchases in recent months, meaning the summer selling/buying season.
Key highlights:
- In April, May and June of 2023, home investors made 85,000, 98,000 and 82,000 purchases, respectively. Over Q2, this was an annual decline of 90,000 purchases.
- When compared to 2019, the increase in home investor activity rose by more than 43,000. Comparing that number with non-investors, who made 392,000 fewer purchases in 2023 than in 2019, it becomes clear how different the current market is.
- Mega-investors (those that own 1,000 or more properties) and large investors (those that own 100 to 999 properties) have both held market shares of between 8% and 10% in each month.
- In the case of mega-investors, this is a drastic decline from the high of 17% of all investor purchases recorded in June 2022. Medium investors (those that own 10 to 99 properties) saw a modest decrease in activity, from 37% to 35%.
- Typical housing market investors are becoming more and more likely to operate on a smaller scale (owning 3 to 9 properties). In June, this group accounted for 47% of investor purchases, the highest level since 2011.
- In April, May and June, mega-investors each made between 7,000 and 9,000 purchases per month, numbers that are consistent with those recorded before the home investor surge began in 2021.
- Small investors made 38,000, 46,000 and 38,000 purchases in April, May and June, respectively. Though these are big drops from 2021 and 2022, they are still above 2019 and 2020 levels. In those years, numbers were a respective 30,000, 34,000 and 31,000 (2019); and 22,000, 23,000 and 32,000 (2020).
- Home investor shares were concentrated in Western, Southern and lower Midwestern states in Q2. California (34%), Washington, D.C. (33%), Georgia (32%), New Mexico (31%), Texas (31%), Nevada (30%), Utah (29%), Arizona (29%) and Kansas (29%) posted the highest investor shares.
- Washington, D.C’s significant gain is somewhat surprising, given investors’ shares in nearby areas. In fact, the District of Columbia’s investor share was 10 percentage points higher than its neighboring states of Virginia (23%) and Maryland (22%).
Major takeaway:
“Though the data shows the usual summer dip in home investor activity, there are no indicators that it will regress to pre-pandemic levels of less than 20%. Elevated interest rates and slowing appreciation seem to have dissuaded large and mega-investors, while small investors have stepped in to fill the gap,” said Thomas Malone, economist at CoreLogic and author of the report. “Inventory levels continue to be constrained, partially because many owners are unwilling to sell and give up the low interest rates that current borrowers secured by refinancing during the pandemic. This trend could potentially be behind the rise of small investor activity in recent months, as members of this group may have chosen to rent their properties rather than sell. Rising demand for rental properties is translating to increasingly unaffordable rates and gives investors a good reason to stay (relatively) more active in the market than owner-occupied buyers.”
For the full report, click here.
