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Investor home purchases climbed during the first quarter of 2024 — the first uptick recorded in two years, according to a new report.

Real estate investors bought roughly 44,000 homes during the first quarter of 2024, according to a report released Thursday by Redfin — just a 0.5 percent uptick from the first quarter of 2023, but the first annual uptick in investor purchases recorded since the first quarter of 2022.

Overall, investors bought 19 percent of all homes sold during the first quarter, according to Redfin data, the highest share in almost two years and an increase from 17.9 percent a year before. The rate remains less than during the pandemic market but is still high when compared to pre-pandemic years.

The main reason for the increase, according to Redfin, is that investors are making more money than they were a year ago. The typical home sold by an investor in March 2024 went for 55 percent more than it was purchased for — up from 46.3 percent in March 2023. Investor purchases were also at a low point during the first quarter of 2023, part of the reason they are rising now.

“Investor activity is steady,” Dallas Redfin Premier agent Connie Durnal said in the report. “When home prices got crazy high during the pandemic, investors sold out. But several months ago, they started to ramp back up. I’m not seeing a lot of home flippers in our market, but there are a lot of investors looking for single-family homes to rent out, which are in short supply.”

Investors are purchasing more single-family homes than any other property type, the report found. Investor purchases of single-family homes increased 3.9 percent year over year in the first quarter, the first annual increase in nearly two years, while investor purchases of townhomes, condos/co-ops and multifamily properties fell 8.6 percent from the first quarter of 2023. The report theorizes that investor purchases of single-family homes have remained strong because of the strong rent growth in that sector, meaning more return on investment.

Single-family properties represented 68.9 percent of investor purchases during the first quarter, the highest percentage since mid-2022. Condos and co-ops made up 18.7 percent of purchases, townhouses made up 7.2 percent and multifamily properties made up 5.3 percent — all down from a year earlier.

The rise in housing prices has affected investors, too, with investors paying more for homes than they did a few years earlier. The typical home purchased by investors in the first quarter cost $464,560 — up 9.2 percent from a year ago, according to the report.

California markets saw the biggest increase in investor activity, with investor home purchases soaring 27.8 percent year over year in San Jose and 22 percent in Oakland, followed by 21.6 percent in Minneapolis, 20.1 percent in Sacramento and 18.5 percent in San Francisco.

Purchases fell sharply in relatively affordable markets, dropping 22.1 percent in Cincinnati, 22 percent in Baltimore and 20.2 percent in Providence, Rhode Island.

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Large investment funds are betting big on the beleaguered commercial real estate sector as banks pull back, according to a report in Reuters.

Funds PGIM, LaSalle, Nuveen, Brookfield, QuadReal, M&G, Schroders, Aviva and others all told Reuters they planned to increase their credit exposure to property, with most funds focusing on multi-family properties, logistics, data centers and high-end office space, which continues to show signs of distress, according to the report.

“If I look at our strongest bet currently, it’s probably real estate debt,” Isabelle Scemama, who leads AXA’s alternative investments operation told Reuters. 

Lasalle Investment Management, which manages a global portfolio of $89 billion, told Reuters its target was to grow its real estate debt investments by 40 percent to around $7.6 billion over the course of the next two years, targeting distribution, hospitality and student housing properties.

Offices continue to undergo their biggest slump since the 2008 financial crisis, spurred by remote and hybrid work policies. Over $38 billion worth of office space currently faces the threat of default, and building owners who bought during pandemic-era high real estate values are now selling for half off 0r more.

However, fund managers told Reuters they believe the worst has passed, and the market is ripe for opportunity.

“Historically through real estate cycles, you would find that generally loans made at the bottom of the cycle… tend to have the lowest delinquency rates and the highest spreads,” Jack Gay, global head of debt at Nuveen told the newswire.

Private equity outfits are also getting in on the market, according to the report. Apollo Global Management has reportedly launched a dedicated European real estate debt fund with a target of a billion Euros by next year, a source told Reuters. 

And while banks at large have pulled back heavily from commercial real estate loans, the fund management arms of some major banks are leaning in. Goldman Sachs Asset Management disclosed on Monday that it had closed a real estate credit fund with over $7 billion in lending capacity — its largest to date.

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The National Association of Realtors announced Monday that it is seeking applications for its sixth annual “pitch battle” competition which will take place August 28=29 in Chicago.

The trade group is seeking applications from real estate startups seeking an opportunity to pitch themselves to investors, real estate professionals and tech enthusiasts for a chance to win $15,000, a booth at NAR’s NXT conference, a meeting with the executive team of Second Century Ventures— NAR’s venture capital arm,  and a feature in Realtor Magazine.

“NAR is committed to fostering innovation in the real estate industry, and the Pitch Battle competition is an excellent opportunity for startups to shine,” said Alex Lange, NAR vice president of Strategy and Innovation. “Companies can showcase their forward-thinking solutions while receiving invaluable exposure and feedback from influential investors, practitioners and tech experts.”

Pitch battle participants will deliver a four minute pitch to a panel of judge’s, which will be followed by a four minutes question and answer session from the judges. about how their product works and how it can be used to improve the real estate industry.

“Winning this event offers unparalleled visibility and opportunities to accelerate growth, opening doors to industry recognition and valuable connections,” Lange said.

2023’s pitch fest saw AI phone call enhancing startup Productive.ai emerge victorious after winning judges over with a live phone call with a potential client during their pitch, in which the tool processed the call in real time and was able to perform tasks such as searching for available properties and schedule an upcoming meeting.

In 2022, home renovations startup Revive was named the winner. The company, which helps guide homesellers through the renovation process to increase the value of their homes, was lauded for its potential to have a noticeable impact on real estate professionals and consumers alike.

Applications for the Pitch Battle will be accepted through June 21, 2024 at ioisummit.realtor/pitch-battle.

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Drastically fewer Americans bought vacation homes in 2023 compared to the year before as elevated mortgage rates made the prospect of a second home a luxury few could afford, according to a new report.

United States homebuyers took out 90,772 mortgages for second homes in 2023 — 40 percent fewer than they did in 2022 and 65 percent fewer than they did during the height of the pandemic housing boom in 2021, according to the report released Monday by Redfin.

Mortgage applications for primary homes fell at half the rate of those for secondary homes. They were down 20 percent annually from 2023 and down 35 percent from 2021, according to the report.

Vacation homes are already a luxury product, and are typically more expensive than a primary home regardless of interest rates, according to the report, with the typical second home worth $475,000 in 2023 compared to $375,000 for a primary home.

While prices are rising, the prospect of owning a vacation home has become less attractive than it was during the pandemic as many workplaces require in-person work, meaning homeowners have less time to spend in their vacation home. Additionally, the prospect of renting a vacation property out has become less attractive as the rental market cools from its pandemic peak and Airbnb hosts make less money than they did during the pandemic.

Those who did purchase vacation homes in 2023 were — unsurprisingly — wealthy, with 86 percent of second home mortgages issued to high-income buyers. They were also overwhelmingly white, with 79 percent of vacation homes going to white buyers while 6.4 percent went to Asian buyers, 6.2 percent to Hispanic buyers and 2.7 percent to Black buyers.

Demand for vacation homes has continued to drop in 2024 according to the report, with mortgage rate locks for second homes down 7.3 percent in April from a year earlier, according to a Redfin analysis of Optimal Blue data.

“Soaring prices pushed down demand for vacation homes last year, both for cash buyers and those getting a mortgage — but the latter pulled back even more because high rates exacerbated high prices,” Phoenix Redfin Premier agent Heather Mahmood-Corley said in a statement.

“There has been a small uptick in interest in second homes this year, mostly from cash buyers who plan to eventually move in full time. People who would need a mortgage are still sitting on the sidelines, waiting for rates to come down — especially because rates are typically even higher for second homes than primary homes.”

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Multifamily developers are feeling less confident in the market for new builds as high interest rates lead to difficult lending conditions.

The National Association of Home Builders’ Multifamily Market Survey, which is made up of two distinct surveys, found that the Multifamily Production Index had a score of 47 out of 100, down three points year over year. The Multifamily Occupancy Index, which gauges the sentiments of owners of existing apartment buildings, moved up one point to 83, signaling that demand for apartments remains high, according to data released Thursday for the first quarter.

“Multifamily developers are concerned about higher interest rates for construction and development loans and tighter lending conditions that are taking place in the market right now,” said Tom Tomaszewski, president of The Annex Group and chairman of NAHB’s Multifamily Council. “There are also many areas across the country where developers are having a difficult time getting their projects approved.”

And while the occupancy index remains high, that could change as more of the in-progress construction of rental units finishes up and more apartments become available.

“Owners of existing apartments continue to report strong occupancy, but this has the potential to soften when more of the 900,000-plus apartments currently under construction come online,” NAHB Chief Economist Robert Dietz said in a statement. “NAHB is currently projecting that multifamily starts will fall 28 percent this year as developer activity slows.”

The occupancy index is graded out of 100, with a score above 50 indicating a positive attitude.

The Multifamily Production Index measures four segments of the market: three in the built-for-rent market and one in the built-for-sale (condominium) market. All four components posted year-over-year declines, with the component measuring mid/high rise units falling five points to 36, the component measuring subsidized units falling one point to 50, and the index measuring built-f0r-sale units falling three points to 39.

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