Jacksonville’s housing market had the highest share of investor activity in the nation during the second quarter, with nearly a third of all home purchases from April through June made by investors.
According to a report from national brokerage firm Redfin, investors bought 31.9% of homes that sold in Jacksonville in the second quarter — more than in Atlanta, where investors bought up 31.8% of homes, Las Vegas (31.5%), Phoenix (31.2%) and Miami (29%).
That number surged in Jacksonville compared to last year, even compared to the other markets with high investor interest. Investor sales were up 40.7% on the First Coast compared to the second quarter of 2021, while they rose 28.2% in Atlanta, 13.9% in Las Vegas, 2.3% in Phoenix and 9.3% in Miami.
That number is down, though, from the beginning of 2022. In the first quarter of the year, 32.3% of homes in metro Jacksonville were bought by investors, according to Redfin — which made it the second largest investor market in the country, behind Atlanta.
“Investors are still showing a lot of interest in my listings, but their method has changed now that we’re past the height of the pandemic homebuying boom,” Redfin agent Heather Kruayai said in a release. “Investors are often waiting for listings to become stagnant before making offers because they know the longer a home sits on the market, the higher the chance they’ll get it below asking price. Some sellers are starting to reject investor offers because they simply aren’t very strong and often come with long inspection periods. They don’t want to risk an investor backing out during the inspection and lose other potential buyers.”
Although Jacksonville has the largest market share of investors in Q2, the total amount of money being spent is far behind that of the other top cities. Investors bought $994.5 million worth of properties on the First Coast, while investing $3.4 billion in Atlanta, $4.6 billion in Phoenix, $3.5 billion in Miami and $2 billion in Las Vegas.
Across the United States, investors have taken a step back from the housing market compared to the second half of last year, but investor purchases are still much higher than in the years leading up to the pandemic.
“Investor purchases probably won’t bounce back to 2021 levels, but they’ll likely remain more common than before the pandemic because the housing market is stable compared with today’s volatile stock market,” said Redfin Senior Economist Sheharyar Bokhari in the report.
There are numerous reasons for the decline from last year’s peak.
Housing inventory remains low, and prices are still high, leaving fewer attractive options for real estate investors.
Though many investors buy homes with cash, some take out mortgages for their properties. Rising mortgage rates put a dent in the profit margins of investors with loans.
Even those who pay with cash are not immune to the U.S. Federal Reserve’s interest rate hikes. Often, that cash comes from other loans that are impacted by interest rates. Stock market proceeds can be a source of capital for home purchases, too. The way indices have performed in 2022 may have tightened some budgets. The Dow Jones Industrial Average, Standard & Poor’s 500 index and Nasdaq composite all have lost more than 10% of their value this year.
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