By Mary Prenon

Investor home purchases saw little advancement in the third quarter of this year, with just a 1 percent year-over-year increase.

Redfin’s Dec. 5 report shows a total of 52,000 investor buys during the quarter, noting that activity in that sector has flattened as many buyers are being priced out of the market. The report cites additional hurdles for investors, such as less potential to make a profit from flipping or renting out a property.

“Investor activity is stuck in neutral because profits are harder to come by, more homes are selling at a loss, and the rental market has softened,” Sheharyar Bokhari, Redfin senior economist, explained in the report. “Investors aren’t completely retreating, but they’re not driving the housing market forward.”

Investor purchases comprised 17 percent of homes sold in the third quarter, representing a slight uptick from 16 percent at the same time in 2024. According to the report, this aligns with the current overall existing home sales market.

Las Vegas took the biggest hit in investor purchases, plunging more than 20 percent year over year. Florida followed, with investor activity down 18 percent in Orlando and 14 percent in both Miami and Fort Lauderdale.

“Investors have been retreating from Florida for years because the Sunshine State’s housing market has been suffering from dropping prices, high inventory, surging [homeowners association] fees and rising insurance costs,” the report stated.

On the opposite end, investors bought more properties in Seattle, Washington, where purchases rose by 37 percent. San Francisco saw a 29 percent hike in investor buys, followed by Milwaukee, Wisconsin; Newark, New Jersey; and Portland, Oregon—all at 28 percent.

In mid-November, Redfin reported that the median home price grew by 2.3 percent year over year, marking the largest increase in seven months. It also noted that homes are staying on the market longer, with the typical home taking an average of 49 days to sell—the longest period since 2019.

Redfin’s December report attributes the elevated prices as one reason for keeping investors on the sidelines. It also indicates that across the country, 8 percent of homes sold by investors during the third quarter were sold at a loss—up from 6.5 percent in 2024. Average investors earned $182,688 in capital gains by selling a home, which it said was down about 1 percent year over year. In late 2020 and 2021, comparatively, investor gains grew by double digits.

According to the report, rental growth has cooled, making leasing properties less lucrative. Economic uncertainty, tariffs, geopolitical issues, and a weakening labor market are also cited as possible deterrents to more robust home investments.

“While investor purchases are sluggish, they aren’t falling,” the report concludes. Many current home investors plan to hold onto their assets until home values and rents rise again, while others may be more likely to buy properties when the market slows. In that case, Redin notes, they may be able to scoop up better deals.

An analysis of the condo market found that investors bought 1 percent fewer condominiums and 4 percent fewer townhouses during the third quarter, compared with the year-ago period, according to the Redfin report.

The report indicates that condos tend to be less attractive to investors due to issues such as hikes in homeowners association fees and assessments—especially in Florida and Texas, where inclement weather can often wreak havoc on buildings.