Your future owner has just outbid you for this house

It’s no secret that rising prices and dwindling inventory have made it difficult to successfully buy a home. The news that investors are increasingly winning these deals should come as no comfort to frustrated homebuyers.

In the third quarter of 2021, investors bought more than 18% of homes sold in the United States, or about 90,000 homes in total, for a total of about $ 64 billion. This is the highest share and the highest number of any quarter on record, according to a new report from Redfin.

“Investors have the advantage because they usually come with money,” said Daryl Fairweather, chief economist at Redfin. “They are generally prepared to forgo inspections. An investor is able to offer more advantageous conditions than an owner-occupant.

The study also found that investors were buying more expensive homes than in the past; the average purchase of a home by an investor in the third quarter cost $ 438,770, about 5% more than the average a year earlier. This means investors are taking advantage of the higher rents paid by middle-class wage earners who in another era might have had an easier time buying themselves.

“Homeowners these days have very good credit. They put a lot of money aside and people who don’t have it are left out, ”Ms. Fairweather noted. “It creates an opportunity for investors to buy houses and rent them out to the very people who would have wanted to buy them.”

The increase in the share of investors is nothing new. In the third quarter of 2000, investors bought only about 6% of available homes; in early 2020, just before the pandemic, their share peaked at 16.6%. After plunging into a pandemic, the share returned to the current record of 18.2%, essentially catching up with the previous trajectory of investor purchases.

To reach their conclusions, Redfin analysts searched sales records and records for keywords indicating the names of buyers, such as “LLC”, “Inc”, “Trust”, “association”, “company” ”And“ corporate administrator ”. The study covered the 50 largest metropolitan areas in the United States, although only 40 could be used due to laws prohibiting access to documents. This week’s chart shows the 20 metropolitan areas in which investor home purchases increased the most year-over-year, according to the report.

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