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Posted On Thursday, 15 February 2024 10:53

Overall, investor home purchases dropped 11% from a year earlier, the smallest decline since they began falling in 2022

Real estate investors bought 26.1% of low-priced U.S. homes that sold in the fourth quarter, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the highest share on record and is up from 24% a year earlier. By comparison, investors purchased 13.6% of mid-priced homes that sold (vs 14.3% a year earlier) and 15.9% of high-priced homes that sold (vs 15.4% a year earlier).

Investors are drawn to affordable homes for the same reason as other homebuyers: They cost less, which is especially attractive when home prices and borrowing costs remain elevated. And when housing affordability is this strained, there could be more potential for value increases in the lower price tier, meaning more potential for building equity.

For its analysis, Redfin determined the three price tiers by dividing home purchases into three buckets: low-priced, mid-priced and high-priced. Low-priced homes are those that fall into the bottom tercile of local sale prices, while mid-priced are those in the middle tercile and high-priced are those in the top tercile.

Low-priced homes made up 46.5% of all investor purchases in the fourth quarter (vs 47.2% a year earlier), while mid-priced homes made up 24.6% (vs 26.4% a year earlier) and high-priced homes represented 28.8% (vs 26.5% a year earlier).

“I get tons of emails every day from investors looking for properties, but of course, they only want homes that are under market value, which are hard to come by. When they find those properties, they pile in,” said Carrie Caruthers, a Redfin Premier real estate agent in Riverside County, CA. “I’ve recently seen an uptick in foreclosures, which investors are interested in because they often sell at a discount. I just sold one foreclosed house to an investor for $400,000. It probably would’ve sold for around $500,000 if it hadn’t been a foreclosure, but the investor got a deal because foreclosure purchases come with risks.”

Overall Investor Home Purchases Dropped 11% in the Fourth Quarter

Investor purchases of U.S. homes fell 10.5% year over year in the fourth quarter to 46,419—the lowest fourth-quarter level since 2016. Overall U.S. home purchases posted a slightly larger decline, falling 12.2% to 251,462—the lowest fourth-quarter level since 2012.

Investor home purchases have fallen in part because high interest rates, elevated home prices and a sluggish rental market have made investing less lucrative. Some investors have shifted their money into other investments that offer good returns and lower risk, such as Treasury bonds. But Redfin agents in both California and Florida said many investors are still hungry for homes.

“There are a lot of investors out there fighting for properties,” said Juan Castro, a Redfin Premier real estate agent in Orlando, FL, which posted the third largest drop in investor purchases in the country last quarter. “There just aren’t enough properties to go around, which is putting a cap on how many homes investors can buy.”

The total supply of homes for sale in the U.S. fell 5.1% year over year in December and remained far below pre-pandemic levels as most homeowners stayed put to avoid losing the rock-bottom mortgage rate they scored during the pandemic.

The typical home purchased by investors in the fourth quarter cost $453,271, up slightly from $426,573 a year earlier, as U.S. home prices ticked up. Overall, investors bought $32.3 billion worth of U.S. homes, down just slightly from $33.6 billion a year earlier.

Investors Purchases Didn’t Fall Nearly as Fast as They Did Last Year

The 10.5% drop in investor home purchases in the fourth quarter marks the sixth straight year-over-year decline. But that pales in comparison to the 44.1% drop of a year earlier and represents the smallest decrease since investor purchases started falling in the third quarter of 2022.

The decline in investor purchases has eased as the shock of elevated mortgage rates has subsided and the U.S. economy has proven to be more resilient than many expected.

“It’s too early to say that investor purchases have hit a bottom, but they’re unlikely to shoot up like they did during the pandemic anytime soon,” said Redfin Senior Economist Sheharyar Bokhari. “That’s because borrowing costs and home prices remain high, the number of homes available to buy remains low and rents remain lackluster. If the Fed cuts interest rates later this year as expected, we may see more investors wade into the housing market.”

Investors Bought Nearly 1 of Every 5 Homes That Sold in the Fourth Quarter

Investors bought 18.5% of U.S. homes that sold in the fourth quarter, up from 18.1% a year earlier. Their market share likely rose slightly because they didn’t retreat as quickly as individual buyers.

Single-Family Homes Represented Over Two-Thirds of Investor Purchases

Single-family homes represented 68.6% of investor purchases in the fourth quarter (vs 68.8% a year earlier). Condos/co-ops made up the second largest share (19.2% vs 17.9% a year earlier), followed by townhouses (7.1% vs 8% a year earlier) and multifamily properties (5.1% vs 5.3% a year earlier).

Metro-Level Highlights: Q4 2023 Investor Activity

Where investor purchases increased/decreased most from a year earlier:

  • Biggest increases: Riverside, CA (+25%), Chicago (+20.9%), San Jose, CA (+18%)
  • Biggest decreases: Cincinnati (-28.8%), Providence, RI (-27.7%), Orlando, FL (-26.5%)

Where investors bought the highest/lowest share of homes that sold:

  • Highest share: In Miami, investors bought 31.5% of homes that sold. Next came Jacksonville, FL (25.6%) and Anaheim, CA (25.5%).
  • Lowest share: Providence, RI (9.9%), Warren, MI (10.1%), Montgomery County, PA (10.2%).

Where the share of homes bought by investors increased/decreased most from a year earlier:

  • Biggest increases: In Sacramento, CA, investors bought 21.5% of homes that sold, up 4.6 percentage points from a year earlier. Next came San Diego (+4.6 ppts) and Riverside (+4.3 ppts).
  • Biggest decreases: Atlanta (-3 ppts), Orlando (-2.7 ppts), Miami (-2.5 ppts).

To view the full report, including charts and additional metro-level data, please visit: https://www.redfin.com/news/investor-home-purchases-q4-2023

Posted On Thursday, 15 February 2024 06:15 Written by
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I spoke a little bit last week about conversions and how tracking your conversion rates can really help you dial in your business. Far too often people are focused solely on lead generation, which is important, but they fail to track those leads through their system and use that data to improve their total conversion rates. So, this week I wanted to explore this just a little bit and give you some information to think about including in your business. Here are the main items you want to track to help you improve your conversions, as well as understanding the net result of your leads from all referral sources.

  1. Referral source
  2. Initial contact
  3. Credit Pull/Preliminary document collection
  4. Preapproval
  5. Contract
  6. Closed

In general, you want to track all of your leads and come to a total number for your overall conversions. However, you also want to be sure you use referral sources as individual categories so you can track specific results. These results may surprise you! You may get dozens of leads from a referral source that you spend time and money on, but close very few deals. On the other hand, you may have a referral source that sends you just a few leads, but you close a significantly higher percentage of them. More isn’t always better! In fact, more could be costing you in the long run!

You also need to look at the relationship between each stage of the process to see where people are falling off. Sometimes a good look at this and some minor adjustments to how and when you follow up can greatly improve your conversions rates! Remember, leads aren’t what puts money in your pocket; closed units are what pays the bills!

If you would like some help working through your conversion rates and how to better track your business, please feel free to reach out and set up a call, This email address is being protected from spambots. You need JavaScript enabled to view it.

Posted On Monday, 19 February 2024 00:00 Written by

Rents haven’t fluctuated much over the past year, rising 1% in January–a far cry from double-digit growth during the pandemic.

The median U.S. asking rent rose 1.1% year over year to $1,964 in January, the largest annual increase since March 2023, and was unchanged from a month earlier, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. While rents ticked up from a year earlier, the bigger picture is that rent growth is leveling off after surging during the pandemic and then rapidly slowing from mid-2022 to mid-2023.

Year-over-year rent growth has hovered between -2.1% and +2.4% for the past year, a much narrower range than the prior year, when rent growth was as low as 4.8% and as high as 17.7%.

Asking rents have flattened because the pandemic moving frenzy is over and landlords are grappling with vacancies due to a jump in apartment supply. The rental vacancy rate was 6.6% in the fourth quarter, tied with the prior quarter for the highest level since early 2021. Vacancies have climbed due to a building boom in recent years. The number of recently completed apartments is near its highest level in more than 30 years, and the number under construction is just shy of its record high. Redfin Chief Economist Daryl Fairweather expects apartment completions to peak in 2024.

While rents have cooled, they haven’t yet posted significant declines. That’s likely because high mortgage rates continue to fuel rental demand, and because some landlords are offering one-time concessions like a free month’s rent or reduced parking costs to attract renters without having to lower asking rents on paper.

Home prices are rising much faster than rents, which is also fueling rental demand and motivating renters to stay put instead of entering the housing market.

“There’s not a huge incentive for renters to buy right now. Asking rents are stable, and while mortgage rates have dipped in recent months, they haven’t fallen enough to make the financial equation of homebuying feasible for many people,” Fairweather said. “If you’re a renter who’s interested in buying but isn’t in a rush, there’s not much downside to waiting for mortgage rates to fall and your savings to grow.”

Buying may make sense for people who can afford a large down payment and plan to stay put for at least five years, Fairweather said. Putting 20% down helps offset the cost of elevated mortgage rates and removes the cost of private mortgage insurance, and some may prefer to buy now before competition inevitably heats up when mortgage rates fall further. Of course, many Americans can’t afford a 20% down payment, though some do qualify for down payment assistance.

Rents Climb Fastest in the Midwest and Northeast

The median asking rent in the Midwest increased 4.6% year over year to a record $1,437 in January. Rents also rose in the Northeast (2.3% to $2,427) and the West (0.6% to $2,358). In the South, rents were unchanged at $1,637. The Midwest was the only region where rents hit a record high.

“Rent prices in Chicago are still out of control,” said local Redfin Premier real estate agent Dan Close. “A lot of the buyers I’m working with are people who have been pressured out of renting–if you’re paying an arm and a leg for rent, why not try to buy and build some equity? We’ll likely see this trend intensify in the spring and summer, when the vast majority of leases end.”

Rents are likely holding up best in the Midwest and Northeast because those regions haven’t been building as much as the South and West, meaning landlords aren’t under as much pressure to fill openings.

To view the full report, including charts and methodology, please visit:
https://www.redfin.com/news/redfin-rental-report-january-2024

Posted On Tuesday, 13 February 2024 13:45 Written by
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