According to a recent analysis from Redfin, real estate investors bought 26.1% of low-priced homes sold in Q4 2023 – which they say is the highest share on record. To get their results, Redfin analyzed county home purchase records across 39 of the most populous U.S. metropolitan areas. They divide home purchases into three buckets: low-priced, mid-priced and high-priced. Low-priced homes are those that fall into the bottom tercile of local sale prices, while mid-priced are those in the middle tercile and high-priced are those in the top tercile.
Some key points:
- Elevated home prices and mortgage rates, along with sluggish rents, have made low-priced homes increasingly attractive to investors.
- Investors bought 18% of all homes that sold in the fourth quarter, up slightly from a year earlier.
- Overall, investor home purchases dropped 11% from a year earlier, though that’s the smallest decline since they began falling in 2022.
“Investors are drawn to affordable homes for the same reason as other homebuyers: They cost less, which is especially attractive when home prices and borrowing costs remain elevated. And when housing affordability is this strained, there could be more potential for value increases in the lower price tier, meaning more potential for building equity.”
