T
he US housing market's slowdown in the third quarter, driven by rising home prices and higher mortgage rates, also led to a decrease in investor purchases, according to a report from Redfin. The Seattle-based brokerage found that real estate investor purchases dropped 2.3% year-over-year in Q3 2024, after four years of fluctuations.

    Investors purchased $38.8 billion worth of properties in Q3 2024, up 3.4% from the previous year and matching home-price increases. Redfin's senior economist Sheharyar Bokhari noted that investors have found a balance after years of rapid buying and then backing off when the market slowed.

    In Q3 2024, investors purchased 15.9% of all homes sold, down from 16.2% in the previous year and the lowest share since the end of 2020. The highest recorded share was 20.9% in Q1 2022, when low mortgage rates attracted investors.

    Investors faced challenges reselling homes for a profit due to rising home prices and mortgage rates. However, interest rates are lower than last year, and demand has improved slightly. Low-priced homes made up 45.7% of investor purchases, while high-priced and mid-priced homes accounted for 30.4% and 23.9%, respectively.

    Miami had the largest share of investor home purchases among analyzed metro areas, followed by Anaheim, California, and San Diego. Detroit saw the highest return on investment (ROI), with investors selling homes for 135% more than their initial purchase price.

    However, over half of the analyzed metros experienced annualized declines in ROI, led by Washington, D.C., Phoenix, and Oakland, California. Miami's investor purchases declined 19.4% year-over-year, while neighboring Fort Lauderdale saw a 23.8% drop, indicating growing concerns about the Florida housing market.

    Redfin noted that investors are backing off from buying homes in Florida due to increasing natural disasters, rising home insurance costs, and skyrocketing HOA fees.