Is the single-family investment splurge over?

Single-family home investors, including the industry’s largest players, are reigning in their spending following a record spree, CoreLogic finds.

The share of homes purchased by investors fell in November from an apex of 26.9% in October and sat at 21.4% in December, according to a CoreLogic report. Investor activity could be reverting to pre-2021 levels after an unprecedented run last year, Redfin economist Thomas Malone wrote.

However, investor share of home purchases could have ticked up more recently, during a period that is traditionally slower for owner-occupied purchases, the report said. Homebuyers faced a brutal winter, with some of the sharpest rate hikes in decades and home prices in February up 19.6% year-over-year. Such conditions have often been blamed on investors of late.

“The truer test of whether the investor purchasing spree is a permanent phenomenon will be seen in the summer months when more owner-occupied buyers are on the market,” Malone wrote.

Large investors with 100 or more properties accounted for 20% of single-family investor purchases by December, a 6% decline from September, according to CoreLogic. Small investors with 3 to 10 properties filled the void, the report said, making up 50.3% of investor purchases in Q4 2021. Mid-sized investors with 10 to 99 properties accounted for 29.7% of the market in December, continuing a decline in market share since accounting for a third of investor purchases before the pandemic.

Purchases have also declined across price tiers. For example, investors accounted for 23.7% of low-priced homes in February after peaking with 28.6% of purchases of this housing stock in October. Flippers are on the decline as the share of homes bought and sold within a six-month period from June to December sat at 13.8%, down from the February-to-August flip rate of 18.2%.

The investment dip also comes alongside a rise in investors’ build-for-rent activity, a potential response to significantly backlogged supply.