Source: Market Watch —
Investors are slinking away from the real-estate market as home-price growth slows and the possibility of price drops appears on the horizon.
Purchases of homes by investors in the U.S. fell by 45.8% year over year in the fourth quarter, according to a new report from real-estate tech company Redfin Corp. RDFN, +9.93%.
The last time investor purchases dropped so significantly was in 2008, during the subprime mortgage crisis, when they fell 45.1%, Redfin said.
In the fourth quarter of 2021, investors bought 89,396 homes in metropolitan areas tracked by Redfin. In the fourth quarter of 2022, investors only bought 48,445 homes in those areas.
The overall drop in mortgage rates and a possible bottoming-out of home prices may lure investors back into the market, but “it’s unlikely that investors will return with the same vigor they had in 2021,” said Sheharyar Bokhari, senior economist at Redfin.
“That’s good news for individual buyers, who are still grappling with high housing costs but no longer losing bidding war after bidding war to investors,” he added.
During the pandemic, many home buyers were outbid and overshadowed by investors who were able to scoop up homes with all-cash offers. The concern over the plight of first-time home buyers prompted Democratic lawmakers to convene a panel to look into possible predatory behavior by institutional investors.
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