From the fourth quarter of 2021 to the fourth quarter of 2022, the number of investor home purchases dropped a record 45.8% year-over-year, according to Redfin.
Redfin released a new report containing this data. It was the Great Recession in 2008 that set the previous record for the biggest drop.
A drop in investor purchases over the last year mirrored a drop in all purchases, which decreased by 40.8% in the fourth quarter.
The drop was most pronounced in the fourth quarter, as investors purchased 27% in the quarter, which was the largest quarterly drop in history.
Despite the fact that many investors have held back from buying homes, investor market share remains steady according to Redfin. The reason is that individual homebuyers have also slowed down. In the fourth quarter, investors bought 17.8% of all homes bought in the metro areas tracked by Redfin. It’s almost the same as 17.6% in the previous quarter and is down from 19.4% a year ago.
Investors may be tempted to re-enter the market due to recent decreases in mortgage rates and home prices.
The year-over-year decline in 2022 was also due to an increase in investor home purchases in the fourth quarter of 2021. The fourth quarter of 2022 saw 48,445 home purchases in metro areas tracked by Redfin, down from 89,396 a year prior and 60,447 in the last quarter of 2019 before the pandemic.
In the fourth quarter, investors purchased 58% fewer mid-priced homes and 53.2% fewer high-priced homes. In contrast, investor purchases of low-priced homes decreased by 28.6%.
The investors also had the highest market share in the low-priced market, purchasing 24.1% of low-priced properties compared to 15% of high-priced properties and 13.8% of mid-priced properties.