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Realtor.com® Investor Report: Top Markets Where Investors Are Impacting the Inventory Crunch

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Realtor.com® Investor Report: Top Markets Where Investors Are Impacting the Inventory Crunch
- Nationally, investors took more inventory off the market than they contributed in April; their purchases represented 5.7% of all home sales
- Among the 50 largest U.S. metros, investors made the biggest contributions to inventory levels in: Atlanta, Dallas, Baltimore, Los Angeles and San Francisco
- In April, investors took away the most inventory in: Phoenix, Charlotte, Miami, Tampa and Chicago

PR Newswire

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.

About Realtor.com®
Realtor.com® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com® pioneered the world of digital real estate more than 20 years ago, and today through its website and mobile apps is a trusted source for the information, tools and professional expertise that help people move confidently through every step of their home journey. Using proprietary data science and machine learning technology, Realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, Realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit Realtor.com®.

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SOURCE Realtor.com

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