The share of single-family homes purchased by investors increased by 5 percentage points from Q2 to Q3, while purchase levels remained steady at around 100,000 units per month, suggesting that the Q2 decline has flattened.
The share of single-family home purchases made by investors bounced back in Q3. After falling from 28% in February to 21% in June, the investor share rose in Q3 but doesn’t seem on track to reach its previous high. Figure 1 shows that the share of investor purchases increased in every month of Q3 to reach 26% in September.
Figure 1: Share of Home Purchases Made by Investors by Month, January 2019 – September 2022
That said, the investor share shows only the level of activity compared with non-investor purchases. The number of investor purchases remained relatively steady throughout Q3, and although lower than in 2021, is high when compared with previous years. Figure 2 shows the number of purchases by investors nationwide, along with the number of purchases made by non-investors. In July, August and September 2022, investors made 107,000, 114,000 and 98,000 purchases, respectively. All three of these numbers are year-over-year decreases of more than 20%.
On the flip side, Q3 numbers represent more than 20% increases from the same months in 2019 and 2020. Owner-occupied buyers, on the other hand, now account for around 30% fewer purchases per month than they did before the COVID-19 pandemic. The combination of rapid mortgage rate increases and price appreciation has pushed affordability down to an unprecedented low. Therefore, it is plausible that rental demand has increased, and investor activity will remain well above pre-pandemic levels to meet this need.
Figure 2: Monthly Home Purchases Made by Investors and Non-Investors, January 2019 – September 2022
Figure 3 shows that big investors are leaving the market quickly and that small investors (those who own fewer than 10 properties) pushed the investor share back up in Q3, from 44% of purchases in June to 49% in September. Medium investors (those with 11 to 100 properties) accounted for 33% of investor home purchases. Large investors (those with 101 to 1,000 properties) represented 8% of all purchases within that category. The most notable shift was in the decline of mega-investors (those with 101 to 1,000 properties), who made up 15% of investor purchases in June and 11% in September. This should not be surprising, given that prices began to decline in Q3 and the presence of mega-investors in the market is highly correlated with price movements.
Figure 3: Share of Investor Purchases by Investor Size, January 2019 – September 2022
Figure 4 shows that small investors not only increased their market share, but also that their level of purchases barely budged in Q3. In June, small investors purchased 47,000 single-family homes, compared with 48,000 in September. Medium investors made 32,000 purchases in both June and September. Large and mega investors, on the other hand, decreased their purchases consistently throughout the quarter. In September, these two groups made a collective 18,000 purchases. 8,000 less than in June.
Figure 4: Monthly Home Purchase Levels by Investor Size, January 2019 – September 2022
Home-flipping activity fell in Q3. Figure 5 shows the share of homes purchased by investors that resold properties within six months through March 2022. Only 15.3% of homes purchased by investors in March had been resold by September, a 2% decrease from December 2021 and one that counters the typical seasonal pattern.
Figure 5: Share of Investor Purchases Resold Within Six Months, January 2019 – March 2022
There is little reason to believe that flippers will become more active in the coming months. Prices are beginning to decline, making flipping a home an uphill battle, as the depreciation in the underlying value of the home and land creates a huge drag on profits. Figure 6 makes this point clear by examining iBuyer market activity. iBuyers made up less than 2% of investor purchases in September, down from 5% in June, and their share of all purchases was at its lowest since November 2020.
iBuyers have still not resold many of the homes they bought; more than half their purchases in June were resold, a symptom of a slowing market and a clear sign that these types of investors are not likely to increase their presence anytime soon.
Figure 6: IBuyer Market Activity, January 2019 – September 2022
As the housing market continues to cool, California is the primary state propping up investor share. Figure 7 shows the 10 metropolitan statistical areas (MSAs) with the highest shares of investor purchases. San Jose, Los Angeles and Riverside are all in the top 10. Atlanta’s share was one-third, at just under 40%, still maintained by an uncommonly large share of mega-investors. All of the other locations in the top 10 are in the South or West, showing investor attraction to strong fundamentals such as high populations.
The types of investors within the MSAs varies greatly. California metros have high shares that are made up of mostly small investors, whereas Southeastern metros like Atlanta and Memphis have an outsized presence of mega-investors. This should not be surprising, since Atlanta and Memphis are still relatively inexpensive, and it is much more financially feasible to acquire 1,000 properties in those metros than in areas like Los Angeles.
Figure 7: Highest 10 Investor Shares by MSA, Q3 2022
If historical buying patterns hold, the investor share will likely continue to rise in Q4, as owner-occupied buyers wait out the winter months. In 2019 and 2020, the market’s investor share was at its highest in the month of January. The future of all investor purchases beyond that is more difficult to predict. Mega- and large investors seem to be ramping down activity, but whether small investors step up to fill the gap is an open question. Housing is becoming increasingly unaffordable, creating strong rental demand that is attractive to investors. Furthermore, with so many homeowners locked in at low mortgage rates, those who must move for personal reasons and have considerable savings might prefer to rent currently owned homes rather than sell and give up mortgage rates that could be unlikely to be seen again for some time
 Using CoreLogic’s public records data, an investor is defined as an entity (individual or corporate) who retains three or moreproperties simultaneously within the past 10 years.
 Non-investors are those who do not meet the CoreLogic definition for an investor (see footnote 1). Only arm-length purchases are considered.
 This translates to a move from 9% to 13% of all single-family purchases from June to September.