The level of home purchase activity by investors fell at a record level during the fourth quarter of 2022.
In response to the high cost of borrowing and the prospect of substantial home price declines, investor purchases of U.S. homes declined by 45.8% on a year-over-year basis in the fourth quarter, a larger year-over-year drop than during the subprime mortgage crisis of 2008, according to a report from Redfin.
Investor purchases decreased 27% on a quarter-over-quarter basis in the fourth quarter, the largest decline since the beginning of the pandemic. Investors eased purchases of single-family homes at a higher rate than all other property types during the quarter. Investor purchases of single-family homes fell by 49.8% year over year in the fourth quarter, while purchases of condos/co-ops declined 35.6% and purchases of townhouses and multifamily properties both decreased by 31.1%. Single-family homes remain the most popular property type among investors, though, representing 69.9% of all investor purchases in the fourth quarter.
In dollar terms, investors bought $31 billion of homes in the fourth quarter, a 42.7% decrease from the fourth quarter of 2021 and a 27.5% decrease from the third quarter of 2022. The typical home investors purchased cost $425,926, relatively unchanged from the fourth quarter of 2021.
Investor home purchases decreased by 67% in Las Vegas, by 66.7% in Phoenix, and by 53.5% in Sacramento in the fourth quarter. Other metros with high levels of year-over-year declines in investor activity include Nassau County, New York; Atlanta; Charlotte, North Carolina; Nashville, Tennessee; Jacksonville, Florida; Riverside, California; and Orlando, Florida. Investors lost the greatest market share in Atlanta (-11.6 percentage points), Charlotte (-11.1 percentage points), Phoenix (-9.3 percentage points), and Las Vegas (-7.9 percentage points.)
Of the 40 metros analyzed by Redfin, Baltimore was the lone market to experience an increase in investor purchases on a year-over-year basis in the fourth quarter.
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