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The level of home purchase activity by investors fell at a record level during the fourth quarter of 2022.

In response to the high cost of borrowing and the prospect of substantial home price declines, investor purchases of U.S. homes declined by 45.8% on a year-over-year basis in the fourth quarter, a larger year-over-year drop than during the subprime mortgage crisis of 2008, according to a report from Redfin.

Investor purchases decreased 27% on a quarter-over-quarter basis in the fourth quarter, the largest decline since the beginning of the pandemic. Investors eased purchases of single-family homes at a higher rate than all other property types during the quarter. Investor purchases of single-family homes fell by 49.8% year over year in the fourth quarter, while purchases of condos/co-ops declined 35.6% and purchases of townhouses and multifamily properties both decreased by 31.1%. Single-family homes remain the most popular property type among investors, though, representing 69.9% of all investor purchases in the fourth quarter.

In dollar terms, investors bought $31 billion of homes in the fourth quarter, a 42.7% decrease from the fourth quarter of 2021 and a 27.5% decrease from the third quarter of 2022. The typical home investors purchased cost $425,926, relatively unchanged from the fourth quarter of 2021.

Despite the decrease in purchase activity, the investor share of the housing market has remained steady as individual home buyers have delayed home purchases. Investors purchased 17.8% of all homes in metros tracked by Redfin in the fourth quarter, comparable with a 17.6% market share in the third quarter and slightly lower than the 19.4% market share in the fourth quarter of 2021.

“It’s possible that investors will start to wade back into the market this year given that mortgage rates have ticked down from their 2022 high—especially if home prices show signs of bottoming,” says Redfin senior economist Sheharyar Bokhari. “But it’s unlikely that investors will return with the same vigor they had in 2021. That’s good news for individual buyers, who are still grappling with high housing costs but [are] no longer losing bidding war after bidding war to investors.”

The dramatic decline in year-over-year investor activity is partially attributable to near record high levels of purchases during the fourth quarter of 2021. Investors entered the housing market in 2021 looking to capitalize on surging housing demand and low mortgage rates. In the fourth quarter of 2021, investors bought 89,396 homes, while they purchased 48,445 homes in the fourth quarter of 2022.

Metros categorized as pandemic boomtowns experienced the largest decline in investor activity on a year-over-year basis in the fourth quarter. After expanding investment in migration destinations such as Las Vegas, Phoenix, and Sacramento, California, due to rising home values and rents, investors are pulling back activity as the markets slow and prospective home buyers continue to be priced out.

Investor home purchases decreased by 67% in Las Vegas, by 66.7% in Phoenix, and by 53.5% in Sacramento in the fourth quarter. Other metros with high levels of year-over-year declines in investor activity include Nassau County, New York; Atlanta; Charlotte, North Carolina; Nashville, Tennessee; Jacksonville, Florida; Riverside, California; and Orlando, Florida. Investors lost the greatest market share in Atlanta (-11.6 percentage points), Charlotte (-11.1 percentage points), Phoenix (-9.3 percentage points), and Las Vegas (-7.9 percentage points.)

Of the 40 metros analyzed by Redfin, Baltimore was the lone market to experience an increase in investor purchases on a year-over-year basis in the fourth quarter.

According to Redfin, investors scaled back purchase activity for mid- and high-priced homes at a much higher rate than low-priced, affordable homes in the fourth quarter. Investor purchases of high-priced and mid-priced homes decreased 53.2% and 58%, respectively, year over year. Investor purchases of low-priced homes fell by 28.6% year over year in the fourth quarter. Low-priced homes accounted for 48.2% of investor purchases in the fourth quarter, and investors bought 24.1% of all low-priced homes that sold in that quarter.