Real estate investors purchased 67,943 U.S. homes in the second quarter of 2021, the highest quarterly figure on record (back to the year 2000), according to a new report from technology-powered real estate brokerage Redfin. That’s up 15.1% from the prior quarter, and up 106.7% from the second quarter of 2020, when activity in the housing market was stalled due to pandemic restrictions.
Redfin defines an investor as any institution or business that purchases residential real estate. In dollar terms, investors bought a record $48.5 billion worth of homes in the second quarter, up from $38.9 billion in the prior quarter and $20.9 billion a year earlier. The typical home they purchased cost $439,600 — 23.7% higher than a year earlier — amid surging housing prices.
Investor market share has nearly returned to pre-pandemic levels. Investors bought about one of every six homes (15.9%) that were purchased in the second quarter of 2021 — just shy of the 16.1% record market share they held in the first quarter of 2020, before the pandemic triggered an economic downturn.
“Investors see soaring home prices as an opportunity,” said Redfin Senior Economist Sheharyar Bokhari. “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.”
Bokhari continued: “Investors are also taking advantage of surging demand in the rental market. With so many Americans priced out of homeownership, investors can turn an easy profit by buying up properties and renting them out.”
About three-quarters (74%) of investor home purchases in the second quarter were financed with all cash — the highest level since 2018.
While multifamily buildings are the most common property type purchased by investors, investor market share in this segment has declined during the pandemic. Investors bought about one-quarter (26.5%) of the multifamily properties that sold in the second quarter, down from a peak of one-third (33.3%) in 2019.
Meanwhile, investor market share of single-family homes and condos is on the rise after dropping during the pandemic. Investors purchased 16.1% of single-family homes and 15.1% of condos that sold in the second quarter, up from a pandemic low of 9.4% and 12.4%, respectively, a year earlier.
In Phoenix, almost one-quarter (24.5%) of homes that sold in the second quarter were purchased by investors—the highest share of the 41 U.S. metropolitan areas Redfin analyzed. Next came Miami, Florida (24.2%); Atlanta, Georgia (23.6%); Charlotte, North Carolina (22.8%) and Las Vegas, Nevada (22.8%).
