Investors Spent Record $48.5B On Housing Units In Q2

The investment market for all types of residential real estate hasn't just recovered from the lows of the early coronavirus pandemic — it has begun reaching new heights.

Between single-family homes, condos, townhomes and multifamily units, investors purchased 67,943 residences in the second quarter, realty platform Redfin reports. That represents the most investment purchases in a quarter since at least 2000, the beginning of Redfin's data. Investors, which Redfin defines as any company or institution purchasing a home rather than an individual, spent $48.5B to buy all those units, also an all-time high within Redfin's data set.

In terms of both the number of purchases and the amount of capital spent, Q2 contained more than double the level of residential investment activity than in the same period last year, which was the nadir of pandemic-driven inactivity, according to Redfin data. The quarter also represents a sizable jump from Q1, with 15% more units purchased and an additional $10.4B spent.

Investors had already been increasing their market share in residential real estate before the pandemic hit, with Q1 of last year seeing a record 16.1% of unit sales of all residential types go to investors. For Q2 of this year, that rate has all but completely recovered to 15.9%. The average cost of a housing unit across all types in Q2 was over $439K, a 23% increase from the same period last year.

“Investors see soaring home prices as an opportunity,” Redfin senior economist Sheharyar Bokhari said in a statement released with the report. “With housing values consistently on the rise, solid returns are pretty much guaranteed — especially when you’re an investor who has access to extremely cheap debt.” 

Investors may also be capitalizing on the homebuying market finally calming down slightly for individual buyers. Pending home sales for the four weeks ending July 11 were 10% below their 2021 peak, which was reached in the last week of May, Redfin reports. Though the average home sale price is still about $4K over the average asking price, the number of price drops in home listings rose by 4% over the previous four-week period.

Investors have been focusing more on single-family homes than ever before, buying them and turning them into rentals, Redfin reports. Over 16% of single-family home sales in Q2 were to investors, the highest share since Redfin began collecting data.

“Investors are also taking advantage of surging demand in the rental market," Bokhari said. "With so many Americans priced out of homeownership, investors can turn an easy profit by buying up properties and renting them out.”

Homes are still being snapped up at astounding rates, with the average period between listing and sale hitting 15 days in the four weeks ending July 11. That average time frame is unchanged from the previous four weeks and is also an all-time high within Redfin's data set. The competition has intensified among investors, as more big names than ever before are chasing assets.