Overall, the median home price in September increased 13.9% year-over-year, with average monthly rents ticking up 10.7% over the same period. And perhaps most significantly for the average individual buyer, more than three-quarters (76.8%) of investor home purchases across the US last quarter were paid for with all cash.

"Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits," said Redfin Senior Economist Sheharyar Bokhari. "Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn the homes they purchase into rentals and can now charge higher rents."

Nearly 3 in 4 investor residential real estate purchases in the third quarter were of single-family homes, the highest level on record and an increase from 70.6% in Q3 2020. Condos/co-ops made up 16.9% of investor purchases, a record low, and townhouse and multifamily housing purchases stayed stable at 5.4% and 3.4%.

Investors were also more likely purchase homes with high heat, drought and flood risk: nearly two-thirds (65.2%) of the homes they bought in Q3 had high heat risk, while 64.3% had high storm risk, 27.1% faced high drought risk, 22.2% had high flood risk, and 3% had high fire risk. 

Despite all this, Redfin's Bokhari maintains there is good news on the horizon for individual buyers.

"With cash-rich investors taking the housing market by storm, many individual homebuyers have found it tough to compete," Bokhari said. "The good news for those buyers is that the housing market has started to cool. Bidding wars are on the decline, and if home-price growth continues to ease, we may see investors slow their roll."

Earlier data from Redfin released last month shows that asking prices of homes listed for sale increased to an all-time high of 12% in September, while pending sales were up just 4%. Less than half of homes sold above list price and new listings of homes for sale down 20% from their 2021 peak.

"Home sellers continue to show their optimism with increasing asking prices," said Redfin Chief Economist Daryl Fairweather. "However, there are already signals from the Fed and markets that mortgage rates are starting to creep up. The hit to affordability that comes with higher rates and higher home prices could let some steam out of the market. It's never a good idea to overprice your home, but I would be especially wary of overpricing as seasonal cooling trends persist and rising rates take some affordability out of the homebuying equation."