Real estate investors mostly stayed away from the housing market during the second quarter, according to new data from Redfin.
Between April and June, investors only acquired roughly 52,000 homes, a 6% year-over-year decline and the biggest drop since the fourth quarter of 2023. The second quarter activity was also the lowest level for that time of year since 2020.
During the second quarter, Redfin determined the typical investor earned $195,934 in capital gains through home selling up 1.7% year-over-year. But 7% of the homes sold by investors were at a loss, up from 5% one year earlier.
Investors were also ignoring the condo market, buying only 9,500 of those properties nationwide in the second quarter, the lowest level for that time of year since 2013, aside from the onset of the pandemic in 2020. This marked a 13% drop from one year before, the greatest decline in nearly two years and at least triple the decline for any other property type. In comparison, investor purchases of single-family homes and townhouses fell 4%, and purchases of multifamily properties fell 2%.
Real estate investors purchased 17% of homes that sold in the second quarter, unchanged from a year earlier. Investors also purchased 17% of condos, 16% of single-family homes, 15% of townhouses, and 33% of multifamily properties – all mostly unchanged year-over-year.
Redfin’s report covers both institutional and mom-and-pop investors, with data was culled from county-level home purchase records across 39 of the most populous metropolitan areas.
“For real estate investors, the numbers just don’t pencil out the way they did a few years ago, whether they’re looking to flip a home or rent it out,” said Redfin Senior Economist Sheharyar Bokhari. “It costs a lot to buy a home, and potential returns are simultaneously softening. That doesn’t mean investors are disappearing—they’re still buying nearly one in five homes in the country—but they’re being choosier about their home purchases, just like individual homebuyers.”
