(NewsNation) — High prices and elevated mortgage rates are weighing on the housing market — even investors are pulling back.
U.S. real estate investors purchased roughly 52,000 homes in the second quarter, down 6% from a year earlier and the lowest springtime level since 2020, according to a new Redfin report.
That’s a sharp drop from 2021, when investors bought a record 90,000 homes in a single quarter.
The slowdown shows even cash-rich investors aren’t immune to high prices, elevated borrowing costs and economic uncertainty, which have sidelined many everyday buyers.
“For real estate investors, the numbers just don’t pencil out the way they did a few years ago, whether they’re looking to flip a home or rent it out,” Redfin senior economist Sheharyar Bokhari said in the report.
Investors may be buying fewer homes, but their share of the market hasn’t slipped — a sign that traditional buyers have retreated, too. In the second quarter, investors accounted for 17% of U.S. home purchases, flat from a year earlier, Redfin said.
That’s down from the pandemic buying frenzy, when the investor share peaked at around 20%. But even with activity cooling, Redfin data shows investors still command a larger slice of the market than before the Great Recession, when they typically made up less than 10% of buyers.
In some cities, like Miami (30%), San Francisco (26%) and Anaheim (26%), the investor share of home purchases was far higher than the national average in the second quarter.
Redfin defined an investor as any institution or business that purchases residential real estate, meaning the report covered both institutional and mom-and-pop investors.
Where are investors pulling back the most?
Investors are retreating from Florida faster than anywhere else, underscoring a broader housing cooldown across the state.
In Orlando, investor purchases fell 25% in the second quarter from a year earlier — the steepest decline among the metros Redfin analyzed. Fort Lauderdale ranked second, with a 21% drop.
Other Florida markets, including Jacksonville (16%), West Palm Beach (15%) and Tampa (13%), also posted double-digit declines.
The pullback in the Sunshine State has been underway for more than a year, following a pandemic-era price surge and a building boom that rapidly expanded inventory. Soaring HOA fees and rising insurance costs have also deterred buyers.
As for specific property types, condos have fallen most out of favor, with investor purchases down 13% year-over-year. Slowing rent growth, rising costs and higher vacancies have all contributed to the decline.
“The condo market is the slowest I’ve seen in at least a decade,” John Tomlinson, a Redfin Premier agent in Fort Lauderdale, said in the report.
Tomlinson added: “HOA fees are high, a lot of insurance companies won’t cover condo buildings on the coast, and some mortgage lenders are quoting higher rates for condos.”
Meanwhile, investor purchases rose on the West Coast, led by Seattle, where they increased 51% year over year. Next were San Francisco (24%) and Portland, OR (14%).
Redfin’s report is based on an analysis of county-level home purchase records across 39 of the most populous U.S. metropolitan areas going back through 2000.
