Despite the turmoil in the housing market, U.S. real estate investors are firing on all cylinders and feeling optimistic.
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Two reports show that despite the housing market turmoil, U.S. real estate investors are firing on all cylinders and feeling optimistic.
The proportion of investors purchasing houses reached a new high in the fourth quarter of 2023, and investor sentiment remained relatively high entering the spring housing market.
Data show that in October, November and December, the proportion of investors purchasing single-family homes was 28%, 27.3% and 28.7% respectively. Reports released this week Developed by CoreLogic – breaking the all-time high share of 28.3% set in February 2022. The report said that by 2024, investors may purchase more than 30% of the shares.
Investors recorded between 79,000 and 80,000 monthly purchases in the fourth quarter, similar to numbers recorded by pre-pandemic investors ahead of a surge in investment in 2021. This contrasts with owner-occupier purchases, which are buying around 100,000 fewer homes per month than before 2022. This shows the resilience of investors in the face of high interest rates and low inventories.
maybe that’s why Investor Sentiment Report Research from RCN Capital and CJ Patrick Company found that real estate investor sentiment remains generally positive, or more specifically, cautiously optimistic. When asked how the current investment environment compares to a year ago, 16% of respondents said “much better,” 20% said “better,” and 36% said “about the same.” 19% responded that it was “worse,” while 8% responded that it was “much worse.”
The report’s authors note that negative sentiment is at an all-time low in the survey’s history, while positive or neutral sentiment is at an all-time high.
More than 41% of investors said they expected things to be “better” or “much better” six months from now than they are now.
However, both homebuyers and iBuyers declined in the fourth quarter. The report said that only 12% of investors who purchased homes in March 2023 resold them at the end of December. When appreciation is slow and interest rates are high, home flipping tends to slow down as rental properties become a more attractive business model.
This is also evident from the buying habits of iBuyers. Throughout 2023, iBuyers will be purchasing only about 1,000 homes per month, a significant drop from the 5,000 to 9,000 homes purchased per month at some points in 2021 and 2022.
This slowdown is arguably due to iBuyers being overly aggressive in purchasing homes during the pandemic housing market, only to get bogged down by excess inventory and less than ideal appreciation in some markets once mortgage rates started rising.
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