Report shows a 30% drop in investor home purchases
BIRMINGHAM, Ala. (WBRC) - A new Redfin report shows more investors pulled out of the housing market during the third quarter of 2022 and it could be a good sign for some looking to buy right now.
The report shows that investors bought $42 billion worth of homes nationwide in the third quarter, which is actually a 30% drop from the previous quarter.
“We’ve seen the feds kind of raise interest rates by 3/4 of a percent, and then they raise them again by 3/4 of a percent and then they raise them again so there’s a lot happening in a short period of time,” said Franklin Solito, the president of Social Mortgage.
He adds that big reasons investors may be slowing down their buying include higher interest rates and inflation prices.
“As an investor, when you’re buying a home, there’s all this work you got to put into it and there’s all this material you have to buy and put in to it,” said Solito. “So if the cost of materials is going up then, at what point do you start covering -- you’re lost on that investment.”
LocAL Realty broker and owner Jeremy Miller says less competition could be a good thing for traditional home buyers.
“When the investors pulled out, it helped slow the appreciation rate down a little bit and in turn gave buyers maybe a little bit better opportunity to compete,” said Miller “And so we saw essentially in that old market, we might have 20 offers inside of a few hours or a weekend. Where in the new market, you might see a couple offers on a really good property but there’s a few less buyers trying to compete right now because they’re pushing pause.”
Even still, Miller says it continues to be a seller’s market, especially when a home is priced correctly.
“We’re still seeing houses move you know in 7-14 days,” said Miller. “Some of them will go quicker but we are seeing some properties because maybe they’re trying to go for that super aggressive price point sitting sometimes as long as 2-3 months if they’re not playing smart.”
Nobody is really sure what the interest rates will look like in the future, so Miller and Solito say it’s smart to go ahead and buy now before interest rates get even higher. If they happen to drop you can refinance.
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