The first quarter of 2024 saw real estate investors acquire their largest share of U.S. home sales since at least five years because mortgage rates have risen and home prices have increased beyond traditional homebuyers’ reach. The housing market transformation shows how affordability challenges are changing the way people purchase homes.
The data from BatchData shows investors acquired 265,000 properties during the first quarter of this year which represents a 1.2% increase from the previous year. The modest annual increase in investor purchases demonstrates a declining number of homebuyers who struggle with high financing expenses.
The purchase share of investors in the market averaged at 18.5% between 2020 and 2023. Home sales remain slow while investors have increased their market share since the beginning of 2024. The real estate market experienced its first downturn in early 2022 after the Federal Reserve started increasing interest rates from their pandemic-era lows.
The industry reports that home sales during 2023 reached their lowest level since the 1990s. The current high mortgage rates have forced potential buyers to delay purchases or rent instead which allows institutional and cash buyers to enter the market.
Some experts believe investor activity helps maintain home values yet others contend it intensifies social inequality because it prevents families from buying homes. The growing difference between these perspectives leads to increased discussions about how the U.S. housing market will develop in the future.
