Investors scaled back on real estate purchases in 2023

foxbusiness.com:

Pulte Capital CEO Bill Pulte argues home prices in the new year won't be going down significantly.

It appears investors' pandemic-era real estate buying frenzy is starting to wear off.

A new Realtor.com analysis released Wednesday found home purchases made by investors declined in the first three quarters of 2023, tumbling an average 32.9% year-to-date in September compared to the year before.

The drop in investor activity was greater than the decline seen in overall activity in the housing market during the same period, which fell 25%.

A for sale sign hangs in front of a home on August 22, 2023 in San Mateo County, California. Investor activity in the housing market cooled during the first part of 2023. ( Liu Guanguan/China News Service/VCG via Getty Images / Getty Images)

From January through September last year, investors bought an average of 10.8% of the houses sold each month, down from 12% during the same period in 2022 but still higher than pre-COVID levels, the study found. The share of inventor buyers peaked in February 2022 at 13.1%.

THE HOUSING SHORTAGE IS FINALLY STARTING TO EASE

When housing demand skyrocketed and rents surged early in the pandemic boom, larger investors edged out smaller investors. Large investors made up 22.3% of investments purchases in January 2020, and their share grew to a high of 34.1% of home purchases in October 2021, which the analysis said could have driven the surge in cash deals during that time due to access to equity.

For perspective, in 2021 and 2022, around 80% of large investors purchased properties with cash. However, large investors are continuing to pull back amid less-certain conditions in the housing market.

Homes in Rocklin, California, on Tuesday, Dec. 6, 2022.