Investor home purchases hit lowest Q2 level since 2020

"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."

"The typical investor earned nearly $196,000 in capital gains on homes sold in the quarter, up 1.7% from last year. That's far lower than the more than 30% annual gains seen in early 2021. Roughly 7% of investor sales in the quarter resulted in a loss, up from 5% a year earlier. Investor demand for condos dropped 13% year-over-year, the steepest decline for any property type and the lowest second-quarter level since 2013, excluding the pandemic."

"By comparison, investor purchases of single-family homes and townhouses slipped 4%, and multifamily properties fell 2%. Condos have grown less appealing because of rising homeowners association fees, special assessments and higher insurance costs. Investors who once bought condos to rent out are finding slower rent growth and rising vacancies while condo values typically appreciate more slowly than single-family homes, Redfin added."

Investors face high borrowing costs, elevated prices and economic uncertainty, while asking rents have softened and some short-term rental markets have cooled. Investors remain active, purchasing nearly one in five homes nationwide, but they are choosier about acquisitions. The typical investor earned nearly $196,000 in capital gains on homes sold in the quarter, a 1.7% increase year-over-year, far below the more than 30% annual gains of early 2021. Roughly 7% of investor sales resulted in a loss, up from 5% a year earlier. Investor demand for condos dropped 13% year-over-year; single-family and townhouse purchases slipped 4% and multifamily fell 2%.

Read at www.housingwire.com