The Resilience of Single-Family Home Investors: A Summer 2023 Market Review

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The real estate market ebbs and flows with economic trends, investor sentiment and societal changes and challenges, but as we delve into the trends of the summer of 2023, one striking aspect emerges — the enduring strength of single-family home investors. Despite a marginal (1%) decrease in investor activity in Q2, the data paint a picture of resilience, adaptation and a market that continues to attract diverse investors.

Steadfast Single-Family Investor Presence

According to data recently published by CoreLogic, March 2023 saw investors responsible for 27% of all single-family home purchases in the US, and as we transitioned into June, that percentage barely shifted, landing at 26%. While some might interpret this minute decrease as a reason for concern, a closer examination reveals a more nuanced perspective.

In comparison to data from May 2019 when investor purchases represented less than 15% of home sales, the subsequent 2021 surge in investor activity (past26%) was indeed remarkable. Today, investor activity remains on average 8 percentage points higher than the pre-pandemic levels of 2020. This consistent elevated interest reflects the enduring appeal of the single-family home investment sector.

A Diverse Single-Family Investment Landscape

A key takeaway from the summer 2023 sales data is the transformation in the composition of investors. Large (own 100 to 999 properties) and mega-investors (own 1,000+ properties) have shown a more muted presence with shares around 8 to 10%. This reflects a notable decline in mega-investor activity from its peak of 17% in June 2022. This decline is being filled by smaller investors who have gradually increased their market share.

Throughout 2023, small investors who own between three and nine properties have emerged as a formidable force, accounting for 47% of investor purchases in June. This shift highlights the adaptability of investors in response to changing market conditions. As mega-investors and large investors have taken a step back, smaller investors are stepping up, suggesting that the market is becoming more accessible to a wider range of participants.

Regional Resilience

Investor activity as a percentage of all single-family home sales is definitely not uniform across the nation, with Western, Southern, and lower Midwestern states emerging as the hotspots. States like California (34%),Washington, D.C. (33%), Georgia (32%), and Texas (31%) have boasted impressive investor shares. Washington, D.C., a relatively unexpected frontrunner, has outpaced neighboring states, emphasizing the localized nature of investor activity.

Looking Forward with Confidence

Amid constrained inventory levels and rising demand for rental properties, small investors are finding ample opportunities to thrive. With many homeowners opting to hold onto their properties to retain low interest rates secured during the pandemic, the rental market is booming, providing investors with strong incentives to stay engaged in the market.

The data from summer 2023 paint a picture of a single-family home investor landscape that is not only resilient but also adaptable to the changing tides of the real estate market. As we navigate the evolving landscape, it's clear that the allure of single-family home investment remains as strong as ever.

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