The RealtyTrac Investor Purchase Report analyzes home sales data from ATTOM Data Solutions to determine the share of real estate investor purchases among all home sales, the median price for investor home sales compared with consumer home sales, and the share of cash sales among investor purchases. The data – which are analyzed quarterly at both the national and state levels – reveals current trends.
As of Q2 2021
- The share of real estate investor purchases among all home sales increased year over year by almost four percentage points and, although this is notable, it does not reflect a significant change of course for investor purchase activity.
- Investors are typically paying less for homes than consumers, casting doubt on the popular theory that investors have deeper pockets and are out-bidding consumers to purchase properties.
- Investors continue to pay for most of their purchases with cash which can give them an edge and increase the potential for price discounts.
Share of Real Estate Investor Purchases Increases Year Over Year
Investor purchases accounted for 15.4% of all home purchases nationally in Q2 2021 compared with 11.5% in Q2 2020 – a year-over-year increase of 3.9 percentage points. While the year-over-year percentage of investor purchases rose, the investor purchase share remained virtually the same as the previous quarter, with investors accounting for 15.4% of all purchases in Q2 2021 compared with 15.9% in Q1 2021. On the whole, the investor purchase share is higher than recent averages, but is not inconsistent with historical trends.
Investor Purchase Activity
Investor purchase activity is up not only up at the national level, but also at the state level. The percent of investor purchases among all home sales increased year over year, from Q2 2020 to Q2 2021, in all states and the District of Columbia with the exception of six states: Alaska, Louisiana, Maryland, Nebraska, Vermont and West Virginia.
“The increases – while notable – do not reflect a significant change of course for investor purchase activity. Historically, investors have always accounted for somewhere between 10% and 15% of residential home purchases, and our data shows that this is still the case today, albeit at the high end of that range. But the data doesn’t support the ‘Wall Street is buying up Main Street’ theme that’s been a popular theory for the past year or so.” Rick Sharga, EVP RealtyTrac
In Most Cases, Investors are Paying Less Than Consumers
On a national basis, investors across the country paid an average of 29.4% less than homeowners in Q2 2021 with a median purchase price of $205,000 for investors compared to $290,230 for all home purchases.
Also in Q2 2021, at the state level among the 38 states with full reporting data – including the District of Columbia, investors paid less than the state median sale price in all but five states in which they paid at or more than the state median
“Another misconception is that investors are overpaying for properties, making it difficult for consumers to compete and artificially driving up prices. But successful investors tend to look for below-market pricing in order to make a profit on their purchases. And many of them buy properties with cash, which gives them a chance to get properties at a discount.”Rick Sharga, EVP RealtyTrac
Investors are Mostly Paying With Cash
As has traditionally been the case, investors are paying with cash in a majority of cases, with data showing a 10 percentage-point year-over-year increase in cash purchases among investors. In Q2 2021, 79% of all investor purchases were cash sales compared with 69% in Q2 2020. As a result of the ability to pay cash, investors typically benefit from even greater price discounts for their all-cash purchases, just as consumers are more likely to benefit from discounted pricing when they pay cash.
Cash purchases accounted for more than 50% of all investor purchases in every state, including the District of Columbia, except for one – Alaska – in Q2 of 2021. This compares with Q2 2020 when cash purchases accounted for more than 50% of all investor purchases in only 41 states with 10 states at less than 50% in cash purchases.
Residential home sales data is sourced from ATTOM Data Solutions and does not include commercial, public, agriculture/farming, industrial or vacant land. It also does not include arms-length transactions or quit claims. A property is considered an investor purchase if the owner type on the transaction is listed as “Company.” If less than 50% of transactions for a state include the transaction amount, the amounts are excluded, showing “No Data.”
Founded in 1996, RealtyTrac publishes the largest database of foreclosure property information in the U.S. along with other real estate and mortgage data used by real estate investors and professionals to find, analyze and purchase residential and commercial distressed properties. RealtyTrac is owned and operated by ATTOM Data Solutions, a leading provider of publicly recorded tax, deed, mortgage and foreclosure data as well as proprietary neighborhood and parcel-level risk data for more than 150 million U.S. properties. For more information, visit www.RealtyTrac.com.
About the Author
Rick Sharga is the Executive Vice President of RealtyTrac, a leading foreclosure search and discovery website used by real estate agents and investors. One of the country’s most frequently-quoted sources on real estate, mortgage and foreclosure trends, Rick has appeared regularly over the past 15 years on CNBC, the CBS Evening News, NBC Nightly News, CNN, ABC World News, FOX, Bloomberg and NPR. Rick is a founding member of the Five Star National Mortgage Servicing Association, a member of the Board of Directors of REOMAC, and was included in the Inman News Inman 100, an annual list of the most influential leaders in real estate in both 2013 and 2014.