Traditional home buyers are not the only ones interested in purchasing properties in residential communities, reveals a recent analysis of public sales records. The analysis of data by John Burns Real Estate Consulting found that investors purchased 33 percent of single-family homes in the United States since January. This percentage is the highest in the last decade.
A professional home investor is either a person or company that purchases homes as all or part of their long-term investment strategy.
In January, the number of real estate investment purchases was more than 32.5 percent, a number that was last reached in February 2013.
This is not all that surprising to industry professionals. According to the report, the first quarter of every year since 2013, has been higher than previous years. In 2021, for instance, investor purchases accounted for 30 percent of home purchases, up four percent from 2020. And over the past decade, home investments have varied between 25 and 30 percent, according to Burns’ data.
Traditionally, analysts define a real estate investment as one where the tax bill is sent to a different address than the property. This data identifies not only real estate investors but also home buyers who are purchasing a second or third home, John Burns Consulting told Business Insider.
Prominent real-estate investors such as Pretium and Tricon Residential along with iBuyers such as Opendoor and Offerpad are leading the charge in purchasing single-family homes with no plans to stop.
Tricon, for instance, informed its investors that it would be expanding its portfolio to include at least 50,000 homes by 2024. At present, the company owns more than 30,000 single-family homes that serve as rental properties.
Buyers such as Opendoor and Offerpad have a different approach to investing. These real estate platforms purchase homes for cash, make minor repairs and improvements and then resell them.
In addition, smaller investors — people hoping to purchase low-cost rental properties — are purchasing homes with much more vigor than in the past. While some of these investors are purchasing an additional property for private use, others are establishing rental properties.
Conflict For Real Estate Investors
Large real estate investors are facing backlash from communities who see their purchases as causing an increase in rent prices and keeping traditional home buyers from having access to properties.
In response, lawmakers are being encouraged to curtail real estate investment activity. In California, for instance, the California Housing Speculation Act was introduced by lawmakers. This bill would impose a 25 percent tax on all profits made on homes sold within three years of purchase.