Realtor.com® Investor Report: Top Markets Where Investors Are Impacting the Inventory Crunch
In this report, areas where investors are contributing inventory refers to places where investors are selling more homes than they are buying.
SANTA CLARA, Calif., July 29, 2021 /PRNewswire/ -- Despite the common perception that investors are always in competition with everyday buyers, new findings from the Realtor.com®Investor Report shows that isn't always the case. According to the data, investors are exacerbating the inventory shortage in 31 of the top 50 U.S. markets, but in roughly 19 markets – including Atlanta, Dallas, Baltimore, Los Angeles and San Francisco – they are actually helping to replenish the number of homes for sale.
Realtor.com® analyzed U.S. deed records from January 2000-April 2021 to determine the number of investor sales versus purchases in the 50 largest U.S. markets. In this report, areas where investors are contributing inventory refers to places where investors are selling more homes than they are buying. Places where investors are taking away inventory are locales where investors are buying more homes than they sell.
"Today's buyers are facing a tough market and data shows they aren't just competing with each other. With deep pockets and more flexibility, investors can be daunting competition for the typical homebuyer. Right now, data shows investors are buying more homes than they are selling, and while they get a lot of attention in today's market, it's worth remembering that they can also contribute to inventory levels," said Realtor.com® Chief Economist Danielle Hale. "Whether a market is appealing to investors depends on a variety of factors, including how local home prices compare to rents. When home prices are rising and rents are more stagnant, investors are more likely to sell off properties and contribute inventory. On the other hand, the higher rents are compared to home prices the more attractive the market is to investors looking to buy homes and convert them into rental properties."
Investors help buyers in big metros with limited homes for sale
In April, investors added to the number of homes on the market in 19 of the 50 largest U.S. metros, with Atlanta (+399 homes), Dallas (+239 homes), Baltimore (+188 homes), Los Angeles (+112 homes) and San Francisco (+93 homes) seeing the biggest contributions. Compared to the markets where investors took away inventory in April, these metros tend to be bigger, with fewer homes for sale and higher listing prices.
Compared to nationwide inventory declines in April (-53%), the top 10 markets where investors are contributing saw a smaller drop, at an average -44% during the same timeframe. However, some of these metros saw even bigger inventory gaps from last year, including the two markets where investors contributed the most inventory in April: Atlanta (-63.4%) and Dallas (-69.7%). At an average population size of 5.5 million, these markets also encompass some of the nation's biggest tech hubs, such as San Francisco and San Jose. Home to some of the most expensive real estate in the U.S., these metros had an average median listing price of $668,000 in April, well above the national median price of $375,000.
Hale added, "High home prices, slower rent growth, and uncertainty over the future of work in these markets are likely causing investors to reevaluate their property portfolios in these areas. And with homes still selling quickly, even in these metros, an investor deciding to sell can look forward to being able to reposition their dollars elsewhere in a very short period of time."
Investors are snatching up homes in smaller markets with higher inventory levels
Investors took away inventory in 31 of the largest U.S. markets, led by Phoenix (-429 homes), Charlotte, N.C. (-287 homes), Miami (-256 homes),Tampa (-224 homes) and Chicago (-221 homes). Compared to the markets where investors helped buyers, these metros are smaller and less crowded, with more available home listings relative to all households, lower home prices, and relatively higher rental price growth.
While average home prices are more affordable in these top markets, rental prices grew at a faster year-over-year pace on average (+4.6%) than in top markets with more investor sales (+0.1%) in April. In Tampa, where the $327,000 median listing price was below the national average of $375,000 in April, rents grew 4.5 times faster than the national rate, up 12.4% year-over-year.
The markets where investors are competing with homebuyers and taking away inventory tend to offer the perfect storm of factors for converting homes into rental properties. These markets have relatively more homes available, at 3.7 properties for every 1,000 residences versus 2.8 in markets where investors are adding to inventory. While these metros have experienced more rapid year-over-year inventory declines in April (-57%), rapid rent price gains keep calculations favorable for buying which means that until rent trends change, investors are likely to be homebuyer foes, not friends.
"Getting ahead in today's market is tough, especially when you are contending with professional investors," said Lexie Holbert, home and living expert at Realtor.com®. "Setting up price alerts on Realtor.com® is a really helpful trick for getting ahead of the competition. When a home that meets your parameters hits the market, you'll get a notification so you can get in and try to make an offer."
Realtor.com® Investor Report, April 2021 – Top 10 Markets by Net Positive Contributions to Inventory, April 2021
|
Metro |
Investor Net Contribution to Inventory |
Median Listing Price |
Median Listing Price Growth Y/Y |
Median Rental Rate Y/Y |
Price to Rent Ratio |
Inventory per 1000 HH |
Inventory Y/Y |
|
Atlanta-Sandy Springs-Roswell, Ga. |
399 |
$392,000 |
20.70% |
9.80% |
22 |
6.1 |
-63.40% |
|
Dallas-Fort Worth-Arlington, Texas |
239 |
$380,000 |
12.00% |
3.60% |
24.5 |
2 |
-69.70% |
|
Baltimore-Columbia-Towson, Md. |
188 |
$336,000 |
2.40% |
5.10% |
17.8 |
2.9 |
-53.20% |
|
Los Angeles-Long Beach-Anaheim, Calif. |
112 |
$1,114,000 |
23.60% |
-4.00% |
37.1 |
2.9 |
-22.10% |
|
San Francisco-Oakland-Hayward, Calif. |
93 |
$1,062,000 |
13.60% |
-10.90% |
33.3 |
2 |
-6.20% |
|
Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va. |
84 |
$506,000 |
1.20% |
-3.90% |
22.4 |
2.9 |
-33.00% |
|
Houston-The Woodlands-Sugar Land, Texas |
73 |
$355,000 |
14.10% |
0.90% |
24.4 |
4.8 |
-54.90% |
|
San Antonio-New Braunfels, Texas |
67 |
$324,000 |
9.00% |
4.40% |
25.1 |
3 |
-70.70% |
|
San Jose-Sunnyvale-Santa Clara, Calif. |
66 |
$1,238,000 |
3.30% |
-12.50% |
38.3 |
1.8 |
-10.80% |
|
Indianapolis-Carmel-Anderson, Ind. |
60 |
$287,000 |
0.90% |
8.60% |
22.4 |
2 |
-59.50% |
Realtor.com® Investor Report, April 2021 – Top 10 Markets by Net Negative Contributions to Inventory
|
Metro |
Investor Net Contribution to Inventory |
Median Listing Price |
Median Listing Price Growth Y/Y |
Median Rental Rate Y/Y |
Price to Rent Ratio |
Inventory per 1000 HH |
Inventory Y/Y |
|
Phoenix-Mesa-Scottsdale, Ariz. |
-429 |
$457,000 |
21.90% |
11.30% |
25.9 |
2.2 |
-68.00% |
|
Charlotte-Concord-Gastonia, N.C.-S.C. |
-287 |
$403,000 |
18.70% |
7.80% |
24.8 |
2.1 |
-66.90% |
|
Miami-Fort Lauderdale-West Palm Beach, Fla. |
-256 |
$418,000 |
4.80% |
3.20% |
18 |
10.6 |
-46.00% |
|
Tampa-St. Petersburg-Clearwater, Fla. |
-224 |
$327,000 |
17.30% |
12.40% |
18.7 |
2.6 |
-72.50% |
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis. |
-221 |
$356,000 |
9.70% |
-3.50% |
18.5 |
4.6 |
-43.40% |
|
Orlando-Kissimmee-Sanford, Fla. |
-151 |
$332,000 |
6.20% |
4.10% |
20 |
3.5 |
-61.70% |
|
Jacksonville, Fla. |
-144 |
$349,000 |
11.90% |
6.20% |
23.9 |
3.7 |
-72.60% |
|
St. Louis, Mo.-Ill. |
-126 |
$266,000 |
13.50% |
7.80% |
20.1 |
3.3 |
-43.90% |
|
Detroit-Warren-Dearborn, Mich |
-121 |
$285,000 |
16.30% |
4.40% |
21.1 |
2.7 |
-53.50% |
|
Seattle-Tacoma-Bellevue, Wash. |
-106 |
$679,000 |
13.20% |
-7.30% |
31.8 |
1.7 |
-44.60% |
Realtor.com® Investor Report, April 2021 – 50 Largest U.S. Metropolitan Areas
|
Metro |
Investor Net Contribution to Inventory |
Median Listing Price |
Median Listing Price Growth Y/Y |
Median Rental Rate Y/Y |
Price to Rent Ratio |
Inventory per 1000 HH |
Inventory Y/Y |
|
Atlanta-Sandy Springs-Roswell, Ga. |
399 |
$392,000 |
20.70% |
9.80% |
22 |
6.1 |
-63.40% |
|
Austin-Round Rock, Texas |
3 |
$515,000 |
40.60% |
1.70% |
31.3 |
2 |
-72.70% |
|
Baltimore-Columbia-Towson, Md. |
188 |
$336,000 |
2.40% |
5.10% |
17.8 |
2.9 |
-53.20% |
|
Birmingham-Hoover, Ala. |
-93 |
$277,000 |
6.40% |
7.80% |
22.7 |
3.8 |
-51.40% |
|
Boston-Cambridge-Newton, Mass.-N.H. |
-49 |
$699,000 |
13.30% |
-6.30% |
24.9 |
2.6 |
-25.10% |
|
Buffalo-Cheektowaga-Niagara Falls, N.Y. |
-5 |
$254,000 |
15.70% |
-0.90% |
19.3 |
1.5 |
-41.30% |
|
Charlotte-Concord-Gastonia, N.C.-S.C. |
-287 |
$403,000 |
18.70% |
7.80% |
24.8 |
2.1 |
-66.90% |
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis. |
-221 |
$356,000 |
9.70% |
-3.50% |
18.5 |
4.6 |
-43.40% |
|
Cincinnati, Ohio-Ky.-Ind. |
-46 |
$352,000 |
15.80% |
7.30% |
26.7 |
1.9 |
-54.40% |
|
Cleveland-Elyria, Ohio |
-27 |
$234,000 |
17.00% |
7.00% |
18.2 |
2.2 |
-54.50% |
|
Columbus, Ohio |
-37 |
$315,000 |
1.70% |
6.20% |
24.1 |
1.6 |
-48.90% |
|
Dallas-Fort Worth-Arlington, Texas |
239 |
$380,000 |
12.00% |
3.60% |
24.5 |
2 |
-69.70% |
|
Denver-Aurora-Lakewood, Colo. |
-42 |
$575,000 |
5.10% |
2.20% |
28.4 |
1.8 |
-56.80% |
|
Detroit-Warren-Dearborn, Mich |
-121 |
$285,000 |
16.30% |
4.40% |
21.1 |
2.7 |
-53.50% |
|
Hartford-West Hartford-East Hartford, Conn. |
2 |
$310,000 |
8.80% |
7.10% |
17.2 |
5.9 |
-35.50% |
|
Houston-The Woodlands-Sugar Land, Texas |
73 |
$355,000 |
14.10% |
0.90% |
24.4 |
4.8 |
-54.90% |
|
Indianapolis-Carmel-Anderson, Ind. |
60 |
$287,000 |
0.90% |
8.60% |
22.4 |
2 |
-59.50% |
|
Jacksonville, Fla. |
-144 |
$349,000 |
11.90% |
6.20% |
23.9 |
3.7 |
-72.60% |
|
Kansas City, Mo.-Kan. |
39 |
$368,000 |
8.10% |
2.20% |
28.5 |
2.3 |
-55.50% |
|
Las Vegas-Henderson-Paradise, Nev. |
-23 |
$379,000 |
15.30% |
10.30% |
24.5 |
5 |
-51.20% |
|
Los Angeles-Long Beach-Anaheim, Calif. |
112 |
$1,114,000 |
23.60% |
-4.00% |
37.1 |
2.9 |
-22.10% |
|
Louisville/Jefferson County, Ky.-Ind. |
-16 |
$272,000 |
-1.00% |
7.10% |
22.8 |
2.6 |
-54.00% |
|
Memphis, Tenn.-Miss.-Ark. |
-13 |
$240,000 |
-4.00% |
13.50% |
19 |
2 |
-58.00% |
|
Miami-Fort Lauderdale-West Palm Beach, Fla. |
-256 |
$418,000 |
4.80% |
3.20% |
18 |
10.6 |
-46.00% |
|
Milwaukee-Waukesha-West Allis, Wis. |
-17 |
$332,000 |
-2.40% |
-1.80% |
20.8 |
1.5 |
-54.90% |
|
Minneapolis-St. Paul-Bloomington, Minn.-Wis. |
-26 |
$366,000 |
0.30% |
-1.00% |
21.2 |
3.2 |
-44.50% |
|
Nashville-Davidson--Murfreesboro--Franklin, Tenn. |
2 |
$417,000 |
11.20% |
3.30% |
25.9 |
2.5 |
-70.60% |
|
New Orleans-Metairie, La. |
-81 |
$345,000 |
19.20% |
11.80% |
21.5 |
4.1 |
-50.70% |
|
New York-Newark-Jersey City, N.Y.-N.J.-Pa. |
-85 |
$629,000 |
9.30% |
0.00% |
22.3 |
7.9 |
-18.10% |
|
Oklahoma City, Okla. |
-52 |
$313,000 |
19.70% |
1.30% |
32.6 |
2.5 |
-67.20% |
|
Orlando-Kissimmee-Sanford, Fla. |
-151 |
$332,000 |
6.20% |
4.10% |
20 |
3.5 |
-61.70% |
|
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md. |
-91 |
$340,000 |
13.30% |
3.90% |
17.7 |
3.2 |
-36.80% |
|
Phoenix-Mesa-Scottsdale, Ariz. |
-429 |
$457,000 |
21.90% |
11.30% |
25.9 |
2.2 |
-68.00% |
|
Pittsburgh, Pa. |
-32 |
$272,000 |
25.20% |
2.00% |
17.5 |
2.7 |
-49.90% |
|
Portland-Vancouver-Hillsboro, Ore.-Wash. |
16 |
$540,000 |
12.90% |
2.30% |
29.3 |
2.6 |
-54.60% |
|
Providence-Warwick, R.I.-Mass. |
4 |
$420,000 |
5.30% |
7.90% |
20.6 |
2.1 |
-57.90% |
|
Raleigh, N.C. |
-27 |
$412,000 |
12.60% |
5.40% |
27.1 |
2.2 |
-72.60% |
|
Richmond, Va. |
-43 |
$375,000 |
11.00% |
10.60% |
26.2 |
3 |
-55.50% |
|
Riverside-San Bernardino-Ontario, Calif. |
35 |
$512,000 |
22.00% |
15.00% |
21.9 |
3 |
-63.70% |
|
Rochester, N.Y. |
-31 |
$264,000 |
5.80% |
8.60% |
18.4 |
1.9 |
-41.60% |
|
Sacramento--Roseville--Arden-Arcade, Calif. |
23 |
$592,000 |
18.60% |
13.60% |
29 |
2.1 |
-54.40% |
|
San Antonio-New Braunfels, Texas |
67 |
$324,000 |
9.00% |
4.40% |
25.1 |
3 |
-70.70% |
|
San Diego-Carlsbad, Calif. |
49 |
$852,000 |
17.30% |
4.80% |
31.2 |
2.7 |
-31.50% |
|
San Francisco-Oakland-Hayward, Calif. |
93 |
$1,062,000 |
13.60% |
-10.90% |
33.3 |
2 |
-6.20% |
|
San Jose-Sunnyvale-Santa Clara, Calif. |
66 |
$1,238,000 |
3.30% |
-12.50% |
38.3 |
1.8 |
-10.80% |
|
Seattle-Tacoma-Bellevue, Wash. |
-106 |
$679,000 |
13.20% |
-7.30% |
31.8 |
1.7 |
-44.60% |
|
St. Louis, Mo.-Ill. |
-126 |
$266,000 |
13.50% |
7.80% |
20.1 |
3.3 |
-43.90% |
|
Tampa-St. Petersburg-Clearwater, Fla. |
-224 |
$327,000 |
17.30% |
12.40% |
18.7 |
2.6 |
-72.50% |
|
Virginia Beach-Norfolk-Newport News, Va.-N.C. |
-8 |
$323,000 |
1.40% |
8.00% |
21.5 |
5.3 |
-53.50% |
|
Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va. |
84 |
$506,000 |
1.20% |
-3.90% |
22.4 |
2.9 |
-33.00% |
Methodology
In this analysis we examined deed records dating from January 2000 to April 2021 nationally and in the 50 largest metro areas. We included only single family homes, condos, townhomes and rowhomes and we excluded multi-family buildings which is not a market the typical homebuyer is competitive in. We attempted to capture business-oriented, buy and hold investor purchases. We defined an investor as a buyer or seller that was/is an absentee-owner and that has a name which includes the following: LLP, LP, LLC, GP, or TRUST. In addition to this broad definition, we also excluded keywords and sale types relating to home builders, relocation service companies, iBuyers, government bodies and financial institutions. Data limitations mean that this analysis likely excludes small investors not registered under a company name. Census estimates show that in 2018 41.2% of rental units were owned by individual investors while 47.5% of units were owned by Trusts, LLPs, LPs, or LLCs, General Partnerships, Real Estate Investment Trusts, or Real Estate Corporations. Ownership entity for more than half of the remaining units was not reported.
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