The total share of homes purchased by investors dropped a record 45.8% year-over-year in the fourth quarter of 2022 amid rising mortgage rates and a nationwide home price correction. Home prices have fallen 11% from their peak last spring, thanks to surging borrowing costs, and that gradual recession is motivating a growing number of investors to seek out other asset classes offering better returns, Forbes reports.
In the meantime, prospective buyers can take advantage of falling home prices and reduced competition from cash-strapped investors engaging in heated bidding wars.
In a statement, Redfin economist Sheharyar Bokhari said it's “possible investors will start to wade back into the market this year” if home prices show signs of bottoming, but he posits it’s “unlikely” they'll return with the same vigor they had in 2021, when investor home purchases neared a record high amid rock-bottom mortgage rates and surging demand.
“That’s good news for individual buyers,” Bokhari says, acknowledging prospective buyers are still grappling with high housing costs but at least are “no longer losing bidding war after bidding war to investors.”
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