Investor purchases dropped almost by half year-on-year in the 1st quarter of 2023 as elevated interest rates along with declining rents and housing values ate into potential profits, according to a report from Redfin. Of total home sales, investors had a 17.6% share.
However, part of the drop relates to the strength of the investor market in the first quarter of 2022. In other words, it’s not that the drop in 1Q 2023 investors was so bad, it’s that the investor market in 1Q 2022 was so good.
Lowering investor ownership in the market may be a good thing in Florida. Recent research out of Atlanta shows that large investor landlords removed billions in wealth from the metro area. As large firms bought up thousands of homes in the Atlanta area after the Great Recession, they were responsible for a “substantial” portion of the metro’s declining homeownership rate, according to an analysis by Georgia Tech School of Public Policy Assistant Professor Brian An.
Although limited to the Atlanta area, the findings may have serious implications for Florida markets, which have seen more homebuying by large firms over time. Understanding the impacts these companies have on the neighborhoods where they operate is tricky, given the complexity of the housing market and the relative novelty of the barely 10-year-old single-family home rental industry.
Even though understanding the impacts is complicated, it is important to remember that large and small investors are an important part of our market. Whether you are in the market to buy or sell, there is a good chance you will feel their impacts.