HousingWireHousingWire
Real estate investors bought fewer homes in the fourth quarter of 2024, with purchases falling to the lowest level for any fourth quarter since 2016, according to a new report from Redfin.
Investors purchased 47,004 homes during the quarter, marking a 3.9% decline from Q4 2023, the steepest drop in a year. The decline comes amid high mortgage rates, slowing homebuyer demand and an uncertain economic outlook.
Redfin agents reported that investors are remaining on the sidelines due in part to profits that aren’t measuring up to the past few years. Redfin also mentioned other factors have contributed to the pullback in investor activity.
- High home prices: Investors are facing the same affordability challenges as other buyers. Pending home sales hit a record low in January, aside from the immediate aftermath of the COVID-19 pandemic.
- Slower price growth and rising inventory: A cooling housing market has made it less appealing for investors to flip homes for profit. Rent growth has also stalled, making it less lucrative to hold properties.
- Economic and political uncertainty: Concerns over inflation, tariffs, job stability and a potential shift in federal policies have made real estate investments riskier.
- High interest rates: While many investors pay in cash, some rely on financing to cover flipping and operational costs. Elevated borrowing costs have made these investments less attractive.
Despite the decline in overall purchases, the total value of investor-bought homes rose 6.3% year over year to $36.5 billion in Q4 2024, mirroring the increase in home sale prices over the same period.
Florida leads the investor pullback
Investors accounted for 17.1% of home purchases in the fourth quarter, the lowest share for any Q4 since 2020 and down from 19% year over year. Investor-owned listings made up 10% of all homes on the market in December, a figure that remained unchanged from a year earlier.
Investor purchases fell most dramatically in Florida. Three of the five U.S. metros with the steepest year-over-year declines were in the Sunshine State. The largest drop was in Orlando, where investor purchases fell by 27.5%.
Other significant declines occurred in Chicago (-23.3%), Miami (-21.3%), Atlanta (-18.4%) and West Palm Beach, Florida (-14.5%).
Florida also saw the most significant drop in investor market share. In Orlando, investors purchased 20.7% of homes sold in Q4 2024, down from 26.6% a year earlier — the sharpest decline for any metro area in the nation. Jacksonville saw a similar drop, with the investor purchase share falling from 25.8% to 21.1% during the year.
Florida’s real estate market has become less attractive to investors due to rising homeowner association fees and insurance costs, along with the growing risk of natural disasters. Home prices in some coastal areas, particularly for condominiums, have declined and are further discouraging investor activity, Redfin reported.
Bay Area activity climbs
While investor activity declined nationwide, some metro areas saw an uptick.
Investor purchases increased the most in Seattle (up 33.8% year over year), San Jose (+21.1%), Oakland (+19.4%), San Francisco (+19.1%) and Detroit (+15.5%).
Seattle also saw the largest increase in investor market share, with investors buying 11.3% of homes sold in the fourth quarter of 2024, up from 9% a year earlier.
Condo purchases hit 12-year low
Investor purchases of condominiums fell 13% year over year to 8,220 units — the lowest level for any fourth quarter since 2012.
The decline was particularly steep in Florida as investor condo purchases dropped nearly 30% in Orlando, 26% in Tampa, and 23% in Miami.
By comparison, investor purchases of single-family homes fell by 1.6%, while townhouse purchases declined by 6.1%. The only segment to see an increase was multifamily properties, which rose 2.9%.
Single-family homes remained the most popular choice for investors, making up 69.4% of all investor purchases in the fourth quarter. Condos accounted for 17.5%, townhouses for 7.5% and multifamily properties for 5.6% — the highest share for multifamily purchases since 2019.
Lower-priced homes are favored
While investor purchases of mid-priced and high-priced homes fell in the fourth quarter by 11.2% and 3.5%, respectively, purchases of lower-priced homes remained stable.
Lower-cost homes continue to attract investors because of their affordability and potential for rental income. Still, investor market share declined across all price tiers. Investors accounted for 24.2% of low-priced home purchases in Q4 2024, down from 26.3% a year earlier.
Redfin’s analysis is based on county-level home purchase records across 39 major U.S. metro areas dating back to 2000. The data includes purchases by both institutional and small-scale investors.
