U
.S. real estate investors purchased 46,726 homes in the first quarter, a 2% increase year over year, according to Redfin's latest report. This marks a return to pre-pandemic levels and ends the wild swings seen during the pandemic era.

    Investor purchases have been relatively stable for the past year, with quarterly increases or decreases of 4% or less. However, investors are backing away from condos as it becomes harder to make money by renting them out, especially in Florida.

    Redfin Senior Economist Sheharyar Bokhari notes that investor home purchases have leveled off because rapid sale-price and rent growth is no longer the norm. While some investors still make money by flipping homes or renting them out, many who jumped into the market in 2021 or 2022 have backed off.

    Investors netted a median of $182,980 in capital gains for each home they sold in March, up 2.8% from a year earlier. Just 6% of homes sold by investors were sold at a loss, up marginally from 5% a year earlier.

    Investor listings made up a slightly smaller share of overall listings than last year, with less than one in 10 (8.4%) total U.S. home listings coming from an investor in March. Investors are selling fewer homes now mainly because their buying activity plummeted in 2023.

    Investors purchased 8,509 condos in the first quarter, down 3% year over year to the lowest level since the onset of the pandemic. The condo market is slowing faster than the overall housing market, with buyers concerned that condos will lose value.

    Florida's stagnant condo market is one reason investor purchases of condos are down nationwide. HOA fees and insurance costs are surging in Florida due to climate-driven natural disasters, making it difficult for investors to make a profit by renting out or flipping condos.

    Investors are buying fewer condos because the money no longer makes sense, according to Redfin Premier agent Stuart Naranch. People who own condos as rentals are trying to offload them, and those who buy condos to rent them out are doing so only if they have cash to burn.

    Florida is home to three of the five metro areas where investor purchases declined most in the first quarter. Investor purchases fell 19% year over year in Miami, more than any other metro in Redfin's analysis.

    Investors still have a higher market share in Miami than any other metro, with investors buying 30% of all Miami homes in the first quarter. However, that's down from a seven-year peak of 35% at the end of 2022 and the lowest share of any first quarter since 2021.

    Investor purchases of single-family homes rose 3% year over year in the first quarter, while purchases of townhouses and multi-family properties were each up 1%. Investors bought roughly one-third (34%) of multi-family properties that sold in the first quarter.

    Investor purchases of high-priced homes nationwide rose 12% year over year in the first quarter, the biggest increase in three years. Meanwhile, investor purchases of low-priced homes fell 4% year over year.