Investors purchased a record 18.2 percent of U.S. homes, amounting to a new high of $63.6 billion in homes during the third quarter of 2021, according to a new Redfin analysis released Monday.

Investors continued to enter the market in droves during the third quarter of 2021, according to a report released Monday by tech-powered brokerage Redfin.

A record 18.2 percent of U.S. homes purchased during the quarter were snapped up by investors, up from 16.1 percent during the second quarter and from 11.2 percent the year before.

In total, investors bought 90,215 homes during Q3, an increase of 10.1 percent from Q2 and an increase of 80.2 percent year over year, marking the second-greatest annual gain ever recorded.

For this report, Redfin defined investors as “any institution or business that purchases residential real estate.”

The typical price of homes purchased by investors was $438,770, 5.3 percent higher than the same time in 2020.

In dollar amounts, investors purchased a record high of $63.6 billion in homes during the third quarter, up from $58.8 billion the quarter before and $35.7 billion the year before.

A whopping 76.8 percent of investor home purchases were paid in cash during the quarter.

Although they’re burning through a lot of cash in the short-term on those home purchases, investors stand to gain over time with those investments, Redfin senior economist Sheharyar Bokhari said in Redfin’s report.

Sheharyar Bokhari | Redfin

“Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits,” Bokhari said. “Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn the homes they purchase into rentals and can now charge higher rents.”

The average monthly rent rose 10.7 percent year over year in September — its fastest rate in two years — and the median home sale price rose 13.9 percent.

With more investors in the market, many homebuyers have faced stark competition, but Bokhari said that may let up soon.

“With cash-rich investors taking the housing market by storm, many individual homebuyers have found it tough to compete,” Bokhari said in Redfin’s report. “The good news for those buyers is that the housing market has started to cool. Bidding wars are on the decline, and if home-price growth continues to ease, we may see investors slow their roll.”

The number of single-family homes purchased by investors hit a new high during the quarter as well, at 74 percent of all investor purchases, which was up from 70.6 percent year over year. Condos and co-ops made up just 16.9 percent of investor purchases (down from 19.8 percent the year before) and townhouses and multifamily housing made up 5.4 percent and 3.4 percent of investor purchases, respectively, about the same as the year before.

Investors appear to be branching out from lower priced homes as well — although they still make up a decent share of investor purchases, that share is declining. Only 36.1 percent of investor purchases during the third quarter were low-priced homes, a new low that was down from 47 percent the year before.

High-priced homes represented 30.8 percent of investor purchases during Q3, down from 32.3 percent in 2020. Mid-priced homes, meanwhile, made gains with investors during the quarter, representing 33 percent of investor purchases, up from 20.8 percent the year before. This quarter marked the first on record during which mid-priced homes made up a larger proportion of investor purchases than high-priced homes.

Risk of heat or storm haven’t deterred investors from purchasing homes in these high-risk areas, according to Redfin. More than 65 percent of investor-purchased homes in the third quarter had a high heat risk, and about 64 percent had high storm risk. Just 27.1 percent of investor-purchased homes faced high drought risk, 22.2 percent high flood risk and about 3 percent high fire risk. (Redfin’s report noted that high fire risk areas are typically rural and have few homes, which is why homes purchased with high fire risk are relatively low.)

Atlanta and Phoenix were the leading markets with the most homes purchased by investors during the third quarter, with 32 percent of homes sold in Atlanta, and 31.7 percent of homes sold in Phoenix, purchased by investors.

Charlotte (31.5 percent), Jacksonville (28.3 percent) and Miami (28.1 percent) also saw high shares of investor purchases during Q3.

Atlanta saw the greatest year-over-year gains in investor purchases, with an increase of 19.1 percentage points year over year. Following Atlanta, Charlotte (up 18.2 percentage points), Phoenix (up 17.7 percentage points), Jacksonville (up 15.2 percentage points) and Las Vegas (up 14.6 percentage points) saw the greatest annual gains.

Email Lillian Dickerson

Redfin | rentals
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