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Investor Home Purchases Drop 30% as Rising Rates, High Prices Cool Housing Market [View all]
Real Estate
Investor Home Purchases Drop 30% as Rising Rates, High Prices Cool Housing Market
Buying activity by companies fell in line with the decline in overall home sales amid higher borrowing costs
By Will Parker
https://twitter.com/_willparker_
will.parker@wsj.com
Updated Nov. 22, 2022 1:11 pm ET
Investor buying of homes tumbled 30% in the third quarter, a sign that the rise in borrowing rates and high home prices that pushed traditional buyers to the sidelines are causing these firms to pull back, too.
Companies bought around 66,000 homes in the 40 markets tracked by real-estate brokerage Redfin during the third quarter, compared with 94,000 homes during the same quarter a year ago. The percentage decline in investor purchases was the largest in a quarter since the subprime crisis, save for the second quarter of 2020 when the pandemic shut down most home buying.
The investor pullback represents a turnaround from months ago when their purchases were still rising fast. These firms bought homes in record numbers last year and earlier this year, helping to supercharge the housing market.
Now, investors are reducing their buying activity in line with the decline in overall home sales, which have slumped with mortgage rates rising fast. But with investors’ large cash positions, and with big firms such as JPMorgan Chase & Co. planning to increase its exposure to the home-buying business, investors are poised to resume more aggressive buying when rates or home prices begin to ease.
{snip}
Write to Will Parker at will.parker@wsj.com
Appeared in the November 23, 2022, print edition as 'Home Sales to Investors Slide 30%'.
Investor Home Purchases Drop 30% as Rising Rates, High Prices Cool Housing Market
Buying activity by companies fell in line with the decline in overall home sales amid higher borrowing costs
By Will Parker
https://twitter.com/_willparker_
will.parker@wsj.com
Updated Nov. 22, 2022 1:11 pm ET
Investor buying of homes tumbled 30% in the third quarter, a sign that the rise in borrowing rates and high home prices that pushed traditional buyers to the sidelines are causing these firms to pull back, too.
Companies bought around 66,000 homes in the 40 markets tracked by real-estate brokerage Redfin during the third quarter, compared with 94,000 homes during the same quarter a year ago. The percentage decline in investor purchases was the largest in a quarter since the subprime crisis, save for the second quarter of 2020 when the pandemic shut down most home buying.
The investor pullback represents a turnaround from months ago when their purchases were still rising fast. These firms bought homes in record numbers last year and earlier this year, helping to supercharge the housing market.
Now, investors are reducing their buying activity in line with the decline in overall home sales, which have slumped with mortgage rates rising fast. But with investors’ large cash positions, and with big firms such as JPMorgan Chase & Co. planning to increase its exposure to the home-buying business, investors are poised to resume more aggressive buying when rates or home prices begin to ease.
{snip}
Write to Will Parker at will.parker@wsj.com
Appeared in the November 23, 2022, print edition as 'Home Sales to Investors Slide 30%'.
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