House prices may be breaking records, but that hasn’t stopped real estate investors from diving in headfirst, snapping up properties at a breakneck pace.
According to Redfin, investor home purchases rose 3% in the second quarter, with these savvy buyers snapping up one in six homes on the market. In total, they spent $43 billion – nearly 14% more than last year.
The hot ticket? House for a family.
Investors can’t get enough, with these properties making up 69% of their purchases. But it’s not just high-end homes they’re looking for – investors have entered the lower end of the market, too, snapping up one in four low-priced homes.
And what is their game plan? Many are likely holding onto these homes to cash in on the rental boom.
Rents for single-family homes skyrocketed during the pandemic, and while things have cooled a bit, the market is still buzzing.
CoreLogic’s index revealed a 3.2% year-over-year increase in single-family rents since May, marking the highest growth rate since April 2022. This suggests that rent growth may be returning to its pre-pandemic pace .
During the pandemic, investors were out in full force, but a trifecta of high prices, rising interest rates and tighter financing had sidelined them in the past few years.
However, the tide is turning. “One reason real estate investors are coming out of hibernation is to take advantage of strong tenant demand,” explained Redfin Senior Economist Sheharyar Bokhari. He noted that many investors, especially those who can pay cash, are taking the chance to avoid the hit of high mortgage rates by capitalizing on rental demand.
The California housing market is a mixed bag these days. Financial guru Robert Kiyosaki recently sounded the alarm, telling Fox Business that California is “failing.”
But the numbers tell a different story. Investors are flooding the West, with San Jose and Las Vegas leading the charge – investor purchases were up 27% in both cities. In Sin City, more than 22% of the homes sold were snapped up by investors.
California dominated the top five markets for investor growth, with Sacramento, Los Angeles and San Francisco all making the list. Redfin reported that San Jose and San Francisco were also among the top cities where overall home sales increased, with San Jose seeing a 15% increase.
That could ease fears that Big Tech layoffs will permanently damage these markets.
Low condo sales at massive discounts and the current real estate crash happening in San Francisco, previously reported by The Post, have also left investors with deep pockets to take advantage of the dire market.
Craig Pellegrini, a Redfin agent in San Jose, found that about a quarter of the buyers he talks to are a mix of institutional and individual investors.
“There are a lot of people with tech money who bought houses here in the early 2000s, built a ton of equity and are now getting a side hustle as a real estate investor,” Pellegrini said. He added that others are renting in expensive neighborhoods like Mountain View and Los Altos, but buying investment properties in more affordable areas like San Jose to build equity.
Meanwhile, in Florida, the story is mixed. Miami and Fort Lauderdale saw a decline in investor activity, however Miami still tops the charts as the area with the highest percentage of investor activity – nearly 29% of homes sold were purchased by investors.
And it’s paying off. Investors are making big money, with only 5% selling at a loss.
The typical investor walked away with a profit 58% higher than their original purchase price.
The biggest winners?
Investors in Philadelphia, where average profits reached 133%. Even in high-priced markets like San Francisco, investors are taking advantage of it, with the typical home selling for $685,000 more than it was originally paid for.
#Investors #quietly #snapping #singlefamily #homes #cities
Image Source : nypost.com