In the wake of higher mortgage rates and dwindling inventory, it appears investors have retreated from the for-sale housing market not only in the Denver area, but nationwide.

According to an August report from Redfin Corp, investor home purchases fell 45% from a year earlier in the second quarter, a decline that outpaced the 31% drop in overall home sales.

In fact, investor purchases declined so much they reached pre-pandemic levels in the second quarter, or about 50,000 homes purchased in that time period — the fewest of any second quarter in seven years.

Other data sources that track the homebuying market are finding a decline in investment activity, too.

The National Association of Realtors found about 11% of transactions in the past three months have been by investors, although most of the investor transactions tracked by the NAR are likely mom-and-pop investors, said Jessica Lautz, deputy chief economist and vice president of research at the NAR.

According to the NAR's measurements, the highest share of non-primary residence buyers — a pool that includes other buyers, including people purchasing vacation homes — was 22% of the market in January 2022.

Existing-home sales declined 0.7% in August to a seasonally adjusted annual rate of 4.04 million, a 15.3% drop from one year ago, according to the latest NAR data. The inventory of unsold existing homes dipped 0.9% from the prior month to 1.1 million at the end of August, or the equivalent of 3.3 months' supply at the current monthly sales pace. A balanced housing market is generally considered to have 6 months' supply.

Today investors are likely doing several calculations, including whether a home purchase is a good long-term investment opportunity, whether they feel they'll gain enough housing equity to sell the home for a good profit later and whether it makes sense to lease a property to a short- or long-term renter.

While inventory remains on the low side in Denver and interest rates are higher than in years past, the good news is that fewer investors means less competition among buyers. If you’re looking to become a homeowner as the year draws to a close contact Metrowest today – we’d be happy to discuss your options!