Wall Street Investors are Snapping Up Homes! Or are They?
March 7, 2022
Have you heard? Investors bought a record share of homes in 2021 and first-time homebuyers are being forced out of the market by Wall Street behemoths! The surge of investors is going to crash the housing market!
It is true that more investors have been purchasing homes over the past year. But the share of investor-owned homes is still pretty small. According to Redfin, investors bought 18% of homes sold in the fourth quarter of 2021, which is a record high. But while the number of homes sold to investors has increased over the past year, the overall number of homes owned by investors remains very small.
Much of the concern about investor activity is around big Wall Street investors, like J.P. Morgan and BlackRock. However, a lot of investor purchases are made by small mom-and-pop investors or individual families buying a second home or rental property. According to the most recent Virginia REALTORS® Confidence Survey, about 14% of home sales in Virginia in February were non-primary residence sales (i.e., homes bought as a rental property, second home, or vacation home).
The most important thing to know about investor activity in the housing market is that it is highly concentrated in a few markets—and it’s just not a major factor here in Virginia. According to a Washington Post analysis of Redfin data, only 6% of homes sold in Northern Virginia were bought by investors, which is about the same share as it was back in 2015. In the Hampton Roads area, investors accounted for 8% of home sales in 2021, again, similar to the share in 2015. These are some of the lowest investor purchase shares in the country.
The markets where investors play the biggest role are in Atlanta, Charlotte, and Miami, where about 25% of homes sold in 2021 were purchased by investors.
Housing markets across Virginia remain very competitive. Inventory is projected to remain low and home buyers are still very active in the market. However, investors are not a major driver of the fast-paced market in the commonwealth. Be sure to spread the news!
Click here to send any comments or questions about this piece to Virginia REALTORS® Chief Economist Lisa Sturtevant, PhD.
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