Since the beginning of the year, fewer investors appear to be jumping into the market, and many report dissatisfaction with managing tenants and properties.
Real estate investors piled into the housing market when interest rates fell to historic lows during the pandemic, and they remained a major force through the end of 2023, purchasing a record share of houses in the fourth quarter.
However, new reports on investor activity appear to paint a different picture — one where cash buyers account for fewer home purchases and overall investor purchases have declined. But despite the recent cooling, investors are still scooping up more homes than they were before the pandemic.
Investor activity is noticeably down this year: According to real estate data provider CoreLogic, investors accounted for 23% of single-family home purchases in June, which represents a 5% drop from January. Most notably, CoreLogic reports, this is the lowest percentage of investor purchases in two years.
But it’s all relative: The average share of investor purchases prior to the pandemic was just 17%.
Some investors are regretting their purchases: Shifting investor sentiment could be contributing to the decline in activity. In a survey of 764 real estate investors, the majority “have regrets about their investments,” Clever Real Estate reported.
Specifically, half complained of issues with bad tenants and/or serious property damage caused by tenants. More than half of the respondents indicated they’ve had to evict a tenant, and over 60% said they’ve had to track down missed rent payments.
Cash purchases also falling: Compared to the typical buyer, investors are more likely to purchase homes with cash — but Realtor.com reported this month that the percentage of investors paying with cash fell to 64% in the first quarter of this year, down from nearly 70% in the fourth quarter of 2021.
Realtor.com researchers speculated that more investors are using financing “because the majority are now independent investors rather than big corporations.”