Record number of investors buying homes, but avoiding pricey DC

Investors bought a record 18.4% of all homes in the United States that were sold in the fourth quarter of 2021, but DC was not among the hot markets.

Potential buyers have a strong opponent in the buying market, and it’s not other families vying for the same home.

Investors bought a record 18.4% of all homes in the United States that were sold in the fourth quarter. That amounted to about 80,000 properties, with a total value of $50 billion, according to real estate firm Redfin, which analyzed the 50 most populous metropolitan areas.



But in metro DC, investors accounted for just 7.8% of all sales in the fourth quarter, the second-lowest share in the nation, behind Providence, Rhode Island.

“It may just have to do with profitability which investors are focusing on a lot. Investors are focusing on lower prices and there aren’t a lot of affordable homes for sale in DC,” Daryl Fairweather said. , chief economist at Redfin.

Metros with the least sales to investors:

  1. Providence, Rhode Island — 6%
  2. Washington, D.C.—7.8%
  3. Warren, Mich. — 8.2%
  4. Virginia Beach, Virginia — 8.6%
  5. Montgomery County, Pennsylvania — 8.6%

Even so, DC-area investor buyers purchased nearly $952 million worth of homes last quarter, at a median price of $425,000, among the highest paying per property compared to the top 50 metros.

CLICK TO ENLARGE: Mid-range goods represent a third of purchases. (Courtesy of Redfin)

Investors often have the advantage of cash and they buy properties for several reasons. One is to chase rising rental rates. They favor single-family homes, and this is a category of rentals that is on the rise.

Another reason they buy is to take advantage of the increase in vacation rentals, like Airbnb and VRBO. And these investors are not all large institutions.

Owning such a property and renting it out at high weekly rates can be more lucrative than an annual lease with just one family. But that can be a headache, even with a management company that does the heavy lifting, like reservations, bookkeeping, and guest relations.

“Anyone thinking of becoming an investor, I would advise them to really research how many hours it will take to run a property, what can go wrong, and if you have tenants that turn regularly, I think you should expect a little more wear and tear, and those costs could add up,” Fairweather said.

Among the cities seeing the biggest increase in investor purchases is Baltimore, which saw an 83% increase in investor purchases over the past year. The median price of a property purchased in Baltimore was $150,000.

Investor buyers are also flocking to the Sunbelt states.

Investor buyers in the Florida cities of Jacksonville, Miami and Fort Lauderdale accounted for 29.8%, 27.5% and 21%, respectively, of all home sales in the fourth quarter, according to Redfin. Investor purchases in Jacksonville last quarter were up 157% from a year earlier.

Redfin’s full report on the fourth quarter investment buyer’s report is online.

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