Investors bought 30% fewer homes in the third quarter of 2022 compared to the same time period last year, as high borrowing costs pressured investors out of the housing market, according to real estate brokerage Redfin Tuesday.
Besides a brief plunge in the second quarter of 2020 in response to the beginning of the coronavirus pandemic, the decline was the steepest since 2008, and surpassed the 27.4% overall decline in home purchases nationwide, Redfin reported. The pandemic ultimately boosted demand for homes in suburban areas, sending investors on buying spree as they raised rents in those areas, in some cases by double digits, The Wall Street Journal reported Tuesday. (RELATED: Mortgage Payments Surge 50% Since Last Year As Homebuyers Get Priced Out)
The average 30-year fixed mortgage rate was 6.61% for the week ending Nov. 17, 2022, more than double the 3.10% rate set for the week ending Nov. 18, 2021, according to Freddie Mac. Until the Federal Reserve eases its aggressive campaign of interest rate hikes designed to combat inflation, rates are unlikely to return to their pandemic-era levels.
“It’s unlikely that investors will return to the market in a big way anytime soon. Home prices would need to fall significantly for that to happen,” Redfin Senior Economist Sheharyar Bokhari said in Redfin’s press release. “This means that regular buyers who are still in the market are no longer facing fierce competition from hordes of cash-rich investors like they were last year”
Buyers typically purchased their homes for 100% of the asking price, with 28% purchasing for more than asking price. The typical home that was recently purchased was 1,800 square feet, had three bedrooms and two bathrooms, and was built in 1986. #NARHBS https://t.co/Z8YNaCR8pK
— NAR Research (@NAR_Research) November 20, 2022
(Read more from “Investors Flee the Housing Market in Troubling Sign for the Economy” HERE)
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