If you’ve been thinking of getting into the housing market, you may be running out of time. That’s because so far in 2024, one out of every five homes purchased nationwide has been bought by investors. This is according to a study conducted by the national real estate website Redfin.com. The website studied purchases made in the first quarter of 2024 and discovered that 44,000 U.S. homes were bought by investors.
These buyers have no intention of living in the properties they purchased. Instead, they plan to flip the homes or use them as short- or long-term rentals.
The 44,000 homes purchased by investors represent a modest but significant 0.5% increase from the same period in the previous year. It’s a sign that investors are regaining confidence in the housing market and see opportunities for returns.
“When you think back to how hectic and competitive the market was between 2020 and 2022, that was largely because of investors,” said Scott Saxton with Just For Buyers Realty. “Investors drove up the prices because they were coming in with cash offers that were often over the asking price.”
A combination of factors could be responsible for getting investors back in the market, including a continued shortage of rental units in many parts of the country, including here in the Cape Fear region.
And while new properties on the rental market may help alleviate the shortage, it will not address one of the big factors causing the shortage — higher home prices are turning people who could have afforded their own home just a few years ago into renters.
“It’s only been one quarter, but if you’re an individual buyer who has been waiting for a perfect time to enter the market, then this study says to me that time is running out,” said Saxton. “As investors come in, prices will go up, and the dream of owning a home may soon be out of reach.”
The Redfin study also revealed a shift in investor preferences. Single-family homes are regaining favor, with purchases in this category rising 3.9% year-over-year in Q1 2024. Investors prefer single-family homes to multifamily structures because they typically come with lower tenant turnover rates, which can translate to less frequent vacancy periods and a more stable income stream.
JFB will be closely monitoring factors like interest rates, overall economic health, and rental market performance to understand how these dynamics will shape the housing market landscape in the latter half of 2024. Understanding these trends will be crucial for both investors and homebuyers as they navigate the evolving housing market.