Investors are taking a more cautious approach to residential real estate, with the condo market worst affected, according to a new analysis by Redfin. That’s a marked contrast with the wild swings experienced during Covid, when investor purchases shot up by as much as 145% annually in 2021 and plummeted by 47% in 2023.
Redfin said the change was because rapid sale-price and rent growth is no longer the norm, though some flippers are still active. Still, one in five purchasers of family homes in 1Q 2025 was an investor.
The majority of investors experienced higher capital gains in the first quarter than they did in March 2024.
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"Investors netted a median of $182,980 in capital gains for each home they sold in March, up 2.8% from a year earlier. Just 6% of homes sold by investors were sold at a loss, up only marginally from 5% a year earlier,” the report stated. The share of investor sale listings was lower than in 2024, largely because their buying had declined during the year.
Nevertheless, investors bought roughly a third (34%) of multi-family properties that sold in 1Q 2025, as well as 19% of single-family homes, townhouses, and condos that sold. In total, investors purchased 46,726 homes in the first quarter, up 2% year-over-year.
The worst effects were felt by condos, where sales are slowing faster than the overall market. “Nearly seven in 10 (68%) U.S. condos sold below list price at the start of 2025, the lowest share in five years,” Redfin wrote. Investor purchases of condos were down 3% (8,509 units) in the first quarter compared to 2024, sinking to the lowest level in 10 years (except Q2 2020), the report stated.
“People who own condos as rentals are trying to offload them because the money no longer makes sense. And people aren’t buying condos to rent them out anymore unless they have cash to burn,” one Redfin agent said. However, people who want to buy condos to own have more room to negotiate prices.
Florida’s condo market was especially hard hit, dragged down by high homeowner association fees and the spiking costs of insurance in a state exposed to natural disasters. Three of the top five metros that experienced the severest slumps in investor activity were in Florida: Miami, down 19% -- the worst of any other metro in Redfin’s analysis, Orlando, down 13% and Fort Lauderdale, down 12%. The other metros in the top five were Warren, MI (down 13%) and Columbus, OH (down 13%).
There are signs investors are favoring purchases of high-priced homes nationwide. They rose 12% year-over-year in the first quarter, the biggest increase in three years, while purchases of mid-priced homes rose 2%. High-priced dwellings made up 30% and mid-priced homes made up 24% of all homes bought by investors in 1Q 2025, representing 18% of all high-priced homes and 14% of all mid-priced homes sold.
In contrast, investor purchases of low-priced homes fell 4% year-over-year, though they still comprised 46% of all homes bought by investors. Investors bought 26% of all low-priced homes that sold in the first quarter.
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