In the fourth quarter of 2023, 26.1% of low-cost U.S. properties that sold were purchased by real estate investors. That is up from 24 percent a year ago and represents the biggest share ever recorded. In contrast, investors bought 15.9% of high-priced homes that sold and 13.6% of mid-priced homes that sold (compared to 14.3% and 15.4%, respectively, a year earlier).
The same factor that draws other purchasers to inexpensive homes also draws investors to them: their lower expenses, which are particularly alluring when both house prices and borrowing costs are high. Additionally, there may be more opportunity for value rises in the lower price range, which would mean more opportunity to develop equity, when housing affordability is this tight. In the fourth quarter, 46.5% of all investor purchases were low-priced properties (compared to 47.2% a year earlier), 24.6% were mid-priced homes (compared to 26.4% a year earlier), and 28.8% were high-priced homes (compared to 26.5% a year earlier).
This is based on an analysis conducted by Redfin on county data of house purchases in 39 of the most populated U.S. urban areas. Any organization or company that buys residential real estate is considered an investor. Redfin separates house purchases into three price ranges: inexpensive, moderately priced, and expensive. The bottom tercile of local sale prices represents low-priced homes, the middle tercile represents mid-priced homes, and the top tercile represents high-priced homes.
How much of an impact investors are having on the housing market is an open topic. Many fear that investors are hurting ordinary buyers by increasing prices and making the housing scarcity worse, and some legislators are proposing to reduce the tax benefits that large corporations receive when they buy real estate. There is "no evidence that SFRs crowd out residential home-buyers or increase home prices," according to a research released this month. Single-family REITs, or businesses that invest in single-family real estate, are referred to as SFRs.
