Investors made up one-quarter of June's home purchases

The investor share of single-family home purchases remained at over one-quarter of the residential sales market in June, but it was 8 percentage points higher than 2020's level, a CoreLogic study found.

But this market is being affected by the inventory shortage, with fewer properties coming online for investors to buy. On the other hand, investors are also competing with people who intend to live in the property, but to what extent has been questioned.

"Investor activity has declined slightly since early 2023, but there is still no sign that the share will fall back to its pre-pandemic level in the near future," the report, authored by Thomas Malone, an economist for CoreLogic, said. "Indeed, the most likely reason for the small drop in home investor purchases in recent months is seasonality, as owner-occupied buyers become more active in the summer."

In June, investor purchases made up 25.76% of home sales, down 21 basis points from 25.97% in May. January saw the highest share of investor property buys so far in 2023 at 27.27%.

But Malone sees the current level as the new norm for investor activity, although the type of buyer is shifting.

"Though the data shows the usual summer dip in home investor activity, there are no indicators that it will regress to pre-pandemic levels of less than 20%," Malone wrote. "Elevated interest rates and slowing appreciation seem to have dissuaded large and mega-investors, while small investors have stepped in to fill the gap."

The investor share has been above 20% since April 2021, peaking in February 2022 at 28.24%.

In June, small investors, defined as those owning between three and nine properties, accounted for 47% of non-owner-occupant purchases for the month, the highest level since 2011, CoreLogic found.

Throughout this year, activity by mega-investors —1,000 or more properties owned — and large investors — between 100 and 999 properties — have each had shares between 8% and 10%.

While the large group's share has been in that range since 2019, the mega-investor share peaked at 17% in June 2022.

Medium investors, with 10 to 99 properties, had a 35% share in June.

An Auction.com survey this spring found one-third of investors expect home values to decline in their local markets; 87% of respondents said they planned to maintain or increase their purchase activity this year.

In the second quarter, investors purchased 265,000 properties, CoreLogic's report said; the number is 90,000 lower than one year prior, but versus the pre-pandemic year of 2019, it was more than 43,000 units higher.

"When comparing that number with non-investors, who made 392,000 fewer purchases in Q2 2023 than in Q2 2019, it becomes clear how different the current market [is] than it was in the previous few years," Malone said.

But regarding sentiment that investor buyers are crowding out owner-occupant purchasers, it is difficult to say conclusively what is happening because no data point exists to measure this, he said in a follow-up statement.

"It is difficult to project the counterfactual where, if those investor purchases had not been made, how many would have been made instead by owner-occupied buyers, and how many would simply not sell," Malone said. "Certainly, there isn't any evidence of investors crowding out buyers in the homeownership rate that has not shown a detectable decline from increased investor activity."

The volatility around home prices has impacted flipping activity. Only 12% of investors that had bought a home last December to repair and then resell within six months had done so, similar to the 11% that did so in the September/March time frame. This is a lower share than in the past Malone noted.

But it is in line with a July report from CJ Patrick that investors are pivoting away from selling in order to rent out the non-owner-occupied single-family residence.