Today's top story: Real Estate Investing is Down 45.8% Year-to-Year

Hi everybody, Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee the sale of your home or I'll buy it!

Ok, so every week, I share market data to keep you informed with the local real estate market.

Here is this week’s Boca Market Watch.

First, Single Family Homes:

This past week, 62 new listings, pretty good, and ranging in price from $425K to a pair of homes listed at $25M, nice! 12 homes back on the market, while 57 homes listed took a price decrease, and 3 sellers raised their asking price. And a lackluster week, with 37 different properties under contract, and 30 going pending. 26 homes were unsuccessful in selling and were taken off the market or the listing expired outright And a new normal week with 31 homes sold, ranging from $517K to $28M!

Next up, Condos and Townhomes:

97 new listings, that's a bunch, and ranging from $93 Grand to $3.5 Million. 21 units came back on the market, 76 properties with a price decrease, and 10 sellers with an increase. And a little better week with 48 different properties under contract, and 42 going pending! 20 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired. 46 closed sales this week, not great, and ranging in price from $135K to $1.45M.

Here's what's happening right now.

Real estate investors are taking a wait-and-see attitude as a result of the mild drop in home prices across some metropolitan areas, leading to a 45.8% year-over-year decline in investor home purchases in the fourth quarter of 2022, that according to a recent report from Redfin. The report stated that the higher cost of borrowing money and declining home values had made real estate investing less attractive, with investors opting to move their money into other asset classes that offer better returns.

The decline in investor purchases in Q4 was the second-biggest on record, with the subprime mortgage crisis in 2008 accounting for the largest decline of 45.1%. However, the decline in investor purchases is not unique to the US housing market; overall US home purchases fell 40.8% year-over-year in Q4 2022.

In Florida, half of the metro areas tracked by Redfin saw a larger percentage drop in investors, with the other three metros experiencing a decline that was less than the national average. Nevertheless, all of the Florida metros saw fewer real estate investors compared to Q4 2021.

While the quarterly comparison showed a 27% slump in investor purchases (Q4 2022 to Q3 2022), the largest quarterly decline on record aside from the beginning of the pandemic, the overall share of homes owned by investors remained about the same since the investor share of purchases dropped in tandem with non-investor purchases. In the metros tracked by Redfin, investors purchased 17.8% of all homes in the fourth quarter, comparable to 17.6% in the prior quarter and down from 19.4% a year earlier.

However, investors' retreat from the housing market might be good news for individual buyers since they will face less competition from investors. Redfin Senior Economist Sheharyar Bokhari believes that investors may start wading back into the market this year, given that mortgage rates have ticked down from their 2022 high, especially if home prices show signs of bottoming.

Investors who plan to be landlords are facing the challenge of slowing rent growth, which is making it more difficult to reap significant returns. In addition, the report highlighted that last year's jump in mortgage rates dampened homebuyer demand, making it more expensive for investors to borrow money, which eats into profits.

In Q4, investors bought $31 billion worth of homes, down 42.7% from $54.1 billion a year earlier and 27.5% from $42.8 billion just one quarter earlier. The typical home that investors purchased cost $425,926, which was little changed from one year earlier but down 5.8% from the previous quarter.

Overall, the decline in investor purchases of US homes highlights the impact of declining home values and rising borrowing costs on the real estate market. This could signal good news for individual buyers, who will face less competition from investors in the housing market. However, that seems to be just a narrow window of opportunity. The huge hedge funds have been hoarding billions of dollars of cash, and they are just waiting for what they hope will be buying opportunities in the 3rd or 4th Quarter of this year. So, if you're thinking about making a purchase, there may never be a better time than the next 3-6 months. Think about it...