MReport January 2022

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M REPORT | 55 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Investors Acquire a Record 90,000+ Homes in Q3 Spurred by lingering inventory concerns and continued low rates, real estate investors bought a record 18% of the total homes sold, according to a new report. E agle-eyed home inves- tors gambling on the continuation of the U.S. housing shortage set a record in Q 3, as Redfin reports that investors accounted for a record 18.2% of the U.S. homes purchased, up from a revised rate of 16.1% in Q2 of 2021, and 11.2% year over year. In total, investors purchased 90,215 homes in Q 3, amounting to $63.6 billion worth of homes, marking a new record for this metric, up 10.1% from Q2, and up 80.2% year over year. The median- priced home purchased cost $438,770—5.3% higher than Q 3 2020. Redfin reported that 76.8% of in- vestor home purchases in Q 3 were paid for in all-cash transactions. "Increasing home prices fueled by an intense housing shortage have created opportunities for in- vestors to reap big profits," Redfin Senior Economist Sheharyar Bokhari said. "Those same factors have pushed more Americans to rent, which also creates opportu- nities for investors because inves- tors typically turn the homes they purchase into rentals and can now charge higher rents." Those shut out of the purchase market had to turn to rentals for their housing needs, as the aver- age monthly rent cost rose 10.7% year over year in September 2021, the fastest growth in at least two years, while the median home sale price increased 13.9%. "With cash-rich investors tak- ing the housing market by storm, many individual homebuyers have found it tough to compete," Bokhari said. "The good news for those buyers is that the hous- ing market has started to cool. Bidding wars are on the decline, and if home-price growth contin- ues to ease, we may see investors slow their roll." By home type, single-family homes accounted for 74.4% of all investor purchases in Q 3—the highest level recorded by Redfin— up from 70.6% a year earlier. Condos and co-ops took a 16.9% share of all investor purchases, a record low, and a decrease from 19.8% in Q2 of 2020. Townhouses and multifamily housing repre- sented 5.4% and 3.4% of investor purchases, respectively—little changed from a year earlier. Redfin recently reported that an increasing number of inquiries have come in from potential buy- ers curious about the climate and an area's flood and fire risk, and how those tangibles factor into insurance costs. In Q 3, 65.2% of the homes pur- chased by investors had high heat risk, while 64.3% had a high storm risk. Meanwhile, 27.1% faced high drought risk, 22.2% had high flood risk, and 3% had high fire risk. Redfin noted that these percent- ages don't add up to 100% because it's possible for homes to face more than one climate risk. Feeding off the climate-related data, investors targeted the Atlanta area in Q 3, as 32% of the homes that sold in Q 3 were pur- chased by this buyer—the highest share of the 40 U.S. metropoli- tan areas Redfin analyzed—fol- lowed by Phoenix with 31.7%; Charlotte, North Carolina, at 31.5%; Jacksonville, Florida, at 28.3%; and Miami at 28.1%. To the other extreme, ar- eas of cooler weather such as Providence, Rhode Island, report- ed that investors purchased just 5.4% of homes sold—a lower share than any other metro in this anal- ysis—followed by Montgomery County, Pennsylvania (7.1%); Virginia Beach, Virginia (7.1%); Washington, D.C. (7.2%); and Warren, Michigan (7.4%). Investors Buy Up a Record 90,000 Homes in the Third Quarter Number of U.S. homes purchased by Investors

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