US Investors' Home Purchases Drop 30%... Largest Decline Since Financial Crisis

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Due to soaring mortgage rates and high home prices, investor purchases of U.S. homes plummeted by 30% in the third quarter.

The Wall Street Journal (WSJ) reported on the 22nd (local time), citing real estate brokerage Redfin, that corporate investors purchased only 65,722 homes in the U.S. during the third quarter. This represents a 30.2% decrease compared to the same period last year (94,191 homes).

Except for the second quarter of 2020, right after the COVID-19 pandemic, this is the largest decline since the 2008 global financial crisis. Considering that investor purchases were on the rise just a few months ago, this reflects a rapid shift in stance in response to signals of a cooling housing market. Compared to the previous quarter, investor purchases also dropped sharply by 26.1%. The proportion of investors among all homebuyers, which was 18.2% a year ago, fell to 17.5%.

The U.S. housing market is showing recent signs of cooling as mortgage rates have surged due to the Federal Reserve's aggressive tightening and signals of economic slowdown have been confirmed.

WSJ stated, "Investors are reducing their buying activity in line with the overall decline in home sales," and noted that during the pandemic period, these investors played a major role in the sharp rise in home prices and rents. Until the first quarter of 2022, one in five home purchases in the U.S. was confirmed to be for investment purposes. John Poloski, an analyst at Green Street, explained, "With borrowing costs skyrocketing, investors have recently been unable to buy much," adding, "It causes many people to put down their pens."

Rent growth has also recently slowed. According to CoreLogic, single-family home rents in September rose 10.1% year-over-year. This is a slowdown compared to the 13.9% increase in April. However, looking back historically, this rent growth rate still remains at a high level.

This content was produced with the assistance of AI translation services.