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Small Investor Share of Investment Property Purchases Increasing

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The significant U.S. home investor share has remained stable lately, holding at 27% in March 2023 and slightly dropping to 26% by June.

Investment property activity surged in 2021, maintaining an average 8% higher market share than in 2020. Although a minor dip occurred in early 2023, this is attributed to seasonal shifts as owner-occupied buyers become more active in summer.

Throughout 2023, mega-investors (1,000+ properties) and large investors (100-999 properties) maintained consistent market shares of 8% to 10%. Investors with 3 to 9 properties accounted for 47% of purchases in June, the highest level since 2011.

In Q2 2023, small investors remained resilient with 38,000, 46,000, and 38,000 transactions in April, May, and June. While lower than 2021 and 2022 peaks, these levels still surpassed those in 2019 and 2020.

The share of homes resold within six months dropped to 12% in June 2023 but slightly increased from the previous three months. This suggests a stabilization in the decline of home flips, related to price appreciation trends.

Recent iBuyer market activity upticks could signal a future rise in overall flipping rates due to rebounding appreciation.

Prominent home investor shares in Q2 2023 were concentrated in Western, Southern, and lower Midwestern states. California, Washington, D.C., and Georgia led the pack.

Despite the usual summer dip, there's no clear regression to pre-pandemic levels. Elevated rates and slower appreciation deterred larger investors, allowing smaller investors to bridge the gap.

Constrained inventory, driven by owners holding low-interest rates from the pandemic, likely fueled small investor activity. Rising rental demand gives them a reason to remain active in the market compared to owner-occupied buyers.

Source: CoreLogic


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