Redfin Says RE Investors Pulled Back 45%

Posted on 09/11/2023

Redfin says “the pandemic-driven homebuying frenzy of 2021 and early 2022,” is over. Undoubtedly, data on investor purchases of real estate looks disastrous. After investors pulled the trigger on real estate in 2021 and 2022, leading to sales increases unmatched even in the early 2000’s housing boom and the 2012 renewed strength in the market, “Investor home purchases fell 45% from a year earlier in the second quarter, outpacing the 31% drop in overall home sales. That’s the biggest decline since 2008 with the exception of the quarter before, when they dropped 48%.” Interestingly, the 2008 housing crash was preceded by about two years of sales declines. If today’s market plays out in a similar way, the housing market could be a year or less out from a severe downturn in prices.

Redfin points out that investors purchased only 50,000 homes in the 39 largest metro areas, which is below normal for the past seven years. Redfin cites an agent who says hedge fund interest is gone, with only unrealistic lowball offers coming in.

At present, though, despite distressing downturns, sellers are still cashing out at higher than pre-pandemic prices. For those who bought in early, the gains remain.

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