Demand for low-priced homes hits new peak
Real estate investors bought over a quarter of America’s most affordable homes during the tail end of the past year, marking the highest share of such transactions on record.
According to a report by Redfin, these investors bought 26.1% of the low-priced homes sold in the fourth quarter of 2023, up from 24% a year earlier.
As for other price tiers, investors were found to have purchased 13.6% of mid-priced and 15.9% of high-priced homes.
Carrie Caruthers, a Redfin Premier agent, highlighted the competitive nature of the market, noting the high demand among investors for below-market-value properties.
“I get tons of emails every day from investors looking for properties, but of course, they only want homes that are under market value, which are hard to come by,” she said. “When they find those properties, they pile in.”
The report also revealed that low-priced homes accounted for 46.5% of all investor purchases in the fourth quarter, a slight decrease from 47.2% in 2022. Meanwhile, mid-priced and high-priced homes accounted for 24.6% and 28.8% of investor purchases, respectively.
Despite the interest in low-priced homes, overall investor home purchases saw a decline of 10.5% from the previous year. A total of 46,419 homes were bought in the fourth quarter, which Redfin said is the lowest for this period since 2016.
Investors were found to have spent an average of $453,271 on homes in the fourth quarter. In total, these purchases amounted to $32.3 billion, which is slightly lower than the $33.6 billion reported in 2022.
Factors such as high interest rates, elevated home prices, and a sluggish rental market have contributed to the diminished attractiveness of home investment. But Redfin agents said demand among investors has remained strong in regions like Florida and California.
“There are a lot of investors out there fighting for properties,” said Juan Castro, another Redfin Premier agent. “There just aren’t enough properties to go around, which is putting a cap on how many homes investors can buy.”
This inventory squeeze continued through December, Redfin noted, with a 5.1% year-over-year decrease in available homes.
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