Investors backing off single-family homes in metro Phoenix
Real-estate investors are pulling back on single family homes, according to a national analysis by Redfin.
Investor purchases dropped the most — 65% year over year — in Las Vegas, Jacksonville and Phoenix, followed closely by Atlanta and Charlotte.
Nationwide, investors bought about 50,000 homes during the second quarter, which is below pre-pandemic levels. In terms of market share, Phoenix saw the biggest drop in investors — they make up roughly 17% of homebuyers, down from 32% a year ago.
Redfin said investors are retreating from the Sun Belt and Florida largely because they had bigger homebuying demand than the rest of the country in 2021 and early 2022, and now the markets are cooling fast.
Of the 39 most populous metro areas studied, Redfin said the highest share of investor-owned properties selling at a loss in June 2023 were: Detroit (14%), Phoenix (13%), San Francisco (12%) and Las Vegas (11%). Nationally, single-family homes made up 68% of investor purchases in the second quarter, down from 73% a year earlier.
Limited inventory, high prices and mortgage rates have reduced demand, factors that Redfin said, "are an even bigger deterrent for investors, because they’re in it purely for the potential to make money by flipping homes or renting them out. When housing demand is down, investors are less motivated."
Redfin's analysis and methodology
| Metro-Level Summary: Investor Home Purchases, Q2 2023 Includes the 39 most populous U.S. metros for which data was available | |||||
| U.S. metro area | Investor purchases, YoY change | Total value of homes bought by investors | Median sale price of homes bought by investors | Share of purchased homes bought by investors | Share of purchased homes bought by investors, YoY change (in percentage points) |
| Anaheim, CA | -26.5% | $2,071,640,045 | $1,208,000 | 21.2% | -0.03 |
| Atlanta, GA | -64.2% | $1,239,203,362 | $253,600 | 17.8% | -14.63 |
| Baltimore, MD | -26.5% | $328,919,394 | $150,000 | 16.5% | 0.66 |
| Charlotte, NC | -61.5% | $568,460,541 | $269,500 | 16.0% | -12.54 |
| Chicago, IL | -12.5% | $773,090,699 | $245,000 | 11.2% | 1.24 |
| Cincinnati, OH | -31.2% | $221,474,525 | $155,000 | 17.2% | -0.82 |
| Cleveland, OH | -24.6% | $185,129,469 | $101,836 | 19.7% | 1.63 |
| Columbus, OH | -46.5% | $225,617,709 | $200,000 | 13.6% | -5.18 |
| Denver, CO | -52.1% | $957,828,877 | $515,300 | 12.5% | -3.96 |
| Detroit, MI | -26.7% | $110,521,752 | $82,000 | 18.8% | -1.18 |
| Fort Lauderdale, FL | -33.4% | $980,913,103 | $350,000 | 18.5% | -1.95 |
| Jacksonville, FL | -64.8% | $394,232,576 | $245,000 | 19.3% | -12.61 |
| Las Vegas, NV | -65.0% | $785,918,213 | $385,000 | 17.5% | -14.63 |
| Los Angeles, CA | -34.6% | $4,224,657,036 | $1,045,000 | 18.6% | -1.47 |
| Miami, FL | -41.1% | $2,150,306,167 | $450,000 | 29.7% | -0.96 |
| Milwaukee, WI | -32.6% | $158,918,788 | $152,750 | 14.0% | -1.65 |
| Minneapolis, MN | -39.5% | $427,945,972 | $282,170 | 10.0% | -1.31 |
| Montgomery County, PA | -29.1% | $179,861,239 | $300,000 | 9.1% | 0.73 |
| Nashville, TN | -52.9% | $589,228,771 | $366,321 | 15.7% | -7.20 |
| New Brunswick, NJ | -26.0% | $466,506,181 | $384,900 | 11.2% | 0.12 |
| New York, NY | -26.3% | $2,818,651,776 | $775,000 | 18.1% | 2.25 |
| Newark, NJ | -31.3% | $296,395,584 | $408,000 | 12.5% | 0.24 |
| Oakland, CA | -30.6% | $1,169,317,000 | $1,100,000 | 15.3% | 0.62 |
| Orlando, FL | -55.4% | $720,501,488 | $316,000 | 18.1% | -9.51 |
| Philadelphia, PA | -27.2% | $228,603,072 | $133,159 | 17.6% | 1.18 |
| Phoenix, AZ | -64.6% | $2,052,937,410 | $415,000 | 16.5% | -15.26 |
| Portland, OR | -35.9% | $425,547,309 | $535,000 | 11.8% | 0.67 |
| Providence, RI | -21.9% | $96,484,368 | $305,000 | 8.3% | 0.57 |
| Riverside, CA | -34.2% | $1,435,877,865 | $565,000 | 18.5% | 1.18 |
| Sacramento, CA | -38.9% | $775,175,400 | $605,000 | 16.6% | -1.54 |
| San Diego, CA | -31.1% | $2,068,671,500 | $999,500 | 21.9% | -0.24 |
| San Francisco, CA | -31.6% | $1,459,292,420 | $1,812,500 | 20.6% | 0.27 |
| San Jose, CA | -29.5% | $1,188,205,364 | $1,800,000 | 15.7% | -0.17 |
| Seattle, WA | -23.1% | $777,506,242 | $856,000 | 10.6% | 1.86 |
| Tampa, FL | -51.7% | $1,071,828,499 | $300,000 | 15.5% | -9.37 |
| Virginia Beach, VA | -33.4% | $192,727,327 | $182,350 | 10.2% | -0.72 |
| Warren, MI | -38.5% | $144,747,929 | $167,000 | 8.7% | -0.31 |
| Washington, DC | -29.8% | $834,863,756 | $435,000 | 8.4% | 0.14 |
| West Palm Beach, FL | -22.9% | $1,568,224,474 | $497,000 | 17.1% | -1.25 |
Methodology provided by Redfin
"For this analysis, we looked at county sale records for homes purchased from January 2000 through June 2023. We define an investor as any buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes. We also define an investor as any buyer whose ownership code on a purchasing deed includes at least one of the following keywords: association, corporate trustee, company, joint venture, corporate trust. This data may include purchases made through family trusts for personal use.
We analyzed home sales in the 50 most populous metro areas, but only included 39 metros in this report due to non-disclosure of sale prices in some counties.
For the price-tier analysis, we looked at all home sales in a given year and sorted each sale into one of three buckets: low-priced, mid-priced or high-priced. Low-priced means a home’s sale price was in the bottom tercile of local sale prices, while mid-priced means it was in the middle tercile and high-priced means it was in the top tercile."
