Investors Buy Record Share of Homes in 2021, Increasing Rental Prices

A new report by Redfin, “Real Estate Investors Are Buying a Record Share of U.S. Homes,” finds that investors bought 18.4% of all homes sold during the fourth quarter of 2021 – the highest ever share of homes purchased by investors. More than 80,000 homes were purchased by investors in the second, third, and fourth quarters each of 2021, resulting in the greatest number of quarterly investor purchases since 2000.

The authors of the report defined an investor as an institution or business that purchases residential real estate.Investors bought 80,293 homes in the fourth quarter of 2021, up from 55,812 in the fourth quarter of 2020 and up from nearly 60,000 in the fourth quarter of 2019. The article notes that investors are likely purchasing homes at such high rates due in part to dramatically increasing rental prices, which make residential real estate an appealing investment for buyers who plan to rent out the homes. However, rising rents worsen the strain for extremely low-income renters, who already face serious difficulties finding affordable housing.

Investor purchases totaled $50 billion in the fourth quarter of 2021. Approximately 75% of investor purchases during the fourth quarter were of single-family homes – about as many as in the third quarter of 2021, making the share of investor purchases of single-family homes during these two quarters the highest on record. Low-priced housing continues to make up the highest share (37%) of investor-purchased homes, but nearly one-third of homes purchased by investors were in the mid-priced market, a result of the overall lack of low-priced homes on the market, according to the authors.

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