Property investors bet US$64b on US homes in record buying spree

New York

REAL estate investors acquired a record 18 per cent of US homes sold in the third quarter of 2021, wagering US$64 billion that home prices and rents will continue to surge.

Investors bought more than 90,000 homes in the three months through September, up 10 per cent from the prior quarter and 80 per cent from a year earlier, according to a report by Redfin Corp.

Low interest rates and a persistent shortage of affordable properties have pushed investors to stomach higher prices as they bank on rent growth and price appreciation.

The record surge of capital into the housing market comes as soaring home prices have made it harder for many families to buy a house.

"I largely attribute this to the decline of the middle class in America," said Daryl Fairweather, chief economist at Redfin. "The more the rich get richer, the more opportunity there is for investors to buy homes and rent them out."

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Investors have typically focused on lower-priced homes, but in Q3 they ramped up their purchases of higher-end properties, reflecting increased competition and confidence that the housing boom will continue.

The median price of investor purchases was US$438,770, the highest on record. Three quarters of the homes were single-family residences, while the balance was a combination of condominiums, co-ops and other property types. For the purposes of the report, Redfin defined investors as any buyer whose name included "LLC", "Inc", "Corp" or other keywords that indicate professional ownership. BLOOMBERG