Filed Under: Business

Report: Investors buy record number of homes as families get priced out

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There’s stiff competition for buying a home in America, especially when first-time buyers are up against all-cash offers from investors. As Americans scramble to lock in a mortgage before rates get higher, investors are buying up a record share of available homes.

According to a new Redfin report, real estate investors bought nearly one in five homes that sold in late 2021. The rate is 44% higher than a year prior and a record since Redfin started keeping track in 2000. Three-quarters of investor home purchases were paid for with all cash.

Investor means any business or institution that is buying a home, including hedge funds. Redfin reports that in the fourth quarter of 2021, investors bought roughly 80,000 homes worth about $50 billion.

The prevalence of investor home buying increases in more affordable cities like Atlanta and Charlotte, where they make up nearly one-third of all home buying in late 2021.

Across the country home prices are at record highs, and while that’s tough for individual homebuyers, Redfin economist Sheharyar Bokhari said there’s one reason investor demand is still “stronger than ever.”

“Investors are chasing rising prices because rental payments are also skyrocketing, incentivizing investors who plan to rent out the homes they buy,” Bokhari said. “The supply shortage is also an advantage for landlords, as many people who can’t find a home to buy are forced to rent instead.”

SIMONE DEL ROSARIO: IT’S STIFF COMPETITION BUYING A HOME IN AMERICA – ESPECIALLY WHEN YOU’RE UP AGAINST MORE THAN JUST YOUR NEIGHBORS. AS FAMILIES SCRAMBLE TO LOCK IN A MORTGAGE BEFORE RATES GET HIGHER – INVESTORS ARE SQUEEZING MANY OUT OF THE AMERICAN DREAM… REAL ESTATE INVESTORS BOUGHT NEARLY ONE IN FIVE HOMES THAT SOLD IN LATE 2021. THAT’S ACCORDING TO A NEW REDFIN REPORT. IT’S ALSO 44% HIGHER THAN A YEAR PRIOR – AND A RECORD SHARE OF HOMES SINCE REDFIN STARTED KEEPING TRACK. THREE FOURTHS OF THE HOMES INVESTORS PURCHASED – WERE PAID FOR ALL CASH – HOW DO YOU COMPETE WITH THAT? INVESTORS MEAN ANY INSTITUTION OR BUSINESS BUYING HOMES – AND LATELY, EVEN HEDGE FUNDS HAVE BEEN GETTING IN ON THE ACTION. IN MORE AFFORDABLE CITIES LIKE ATLANTA AND CHARLOTTE – ABOUT A THIRD OF HOMES ARE GOING TO INVESTORS. ACROSS THE COUNTRY HOME PRICES ARE AT RECORD HIGHS – AND WHILE THAT’S TOUGH FOR INDIVIDUAL HOMEBUYERS, ONE REDFIN ECONOMIST SAID THERE’S A REASON INVESTOR DEMAND IS “STRONGER THAN EVER.” SAYING “INVESTORS ARE CHASING RISING PRICES BECAUSE RENTAL PAYMENTS ARE ALSO SKYROCKETING…”AND THE FAMILIES THAT GET BEAT OUT TRYING TO BUY ARE FORCED TO PAY THOSE RENTS. I’M SIMONE DEL ROSARIO AND FROM NEW YORK IT’S JUST BUSINESS.

There’s stiff competition for buying a home in America, especially when first-time buyers are up against all-cash offers from investors. As Americans scramble to lock in a mortgage before rates get higher, investors are buying up a record share of available homes.

According to a new Redfin report, real estate investors bought nearly one in five homes that sold in late 2021. The rate is 44% higher than a year prior and a record since Redfin started keeping track in 2000. Three-quarters of investor home purchases were paid for with all cash.

Investor means any business or institution that is buying a home, including hedge funds. Redfin reports that in the fourth quarter of 2021, investors bought roughly 80,000 homes worth about $50 billion.

The prevalence of investor home buying increases in more affordable cities like Atlanta and Charlotte, where they make up nearly one-third of all home buying in late 2021.

Across the country home prices are at record highs, and while that’s tough for individual homebuyers, Redfin economist Sheharyar Bokhari said there’s one reason investor demand is still “stronger than ever.”

“Investors are chasing rising prices because rental payments are also skyrocketing, incentivizing investors who plan to rent out the homes they buy,” Bokhari said. “The supply shortage is also an advantage for landlords, as many people who can’t find a home to buy are forced to rent instead.”

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