Investors nab record slice of US home market. Here’s what they’re doing in Sacramento

Investment buyers purchased 56.3% more homes in the Sacramento area compared to last year, according to a new real estate report from real estate brokerage Redfin..

Nationwide, investment buyers are increasingly buying more expensive homes in order to capitalize on pandemic-driven trends that have seen people leaving big cities for places where they can get more for their money, according to Redfin’s analysis released Monday.

The term investment buyer generally refers to a person, group or fund that buys homes in order to make a profit. Generally, this excludes homes purchased for personal use, but Redfin’s definition can also include homes purchased via family trusts for personal usage. Redfin combed through county sale records for homes purchased from January 2000 through September 2021 to generate its analysis.

In the third fiscal quarter of the year, investment buyers bought a record 90,125 homes, or 18.2% of U.S. homes purchased..

This increase in investor purchases comes as California struggles with a severe housing shortage. Sacramento was recently named the least affordable new home market in the U.S., tied with Miami. While real estate investors often flip homes and put them back on the market or turn homes into much-needed rental properties, they also represent tough competition for traditional home buyers. This is because investors are typically armed with a glut of cash.

How big is the investment buyer presence in Sacramento?

Here’s a breakdown of the latest numbers:

How many homes did investors purchase in Sacramento?

In quarter three, investor purchases made up 19.4% of all home sales in the Sacramento region, compared to 12.5% from the same quarter in 2020.

The median home sale price for these investment purchases was $569,500, according to Redfin. The current median home sale price overall for Sacramento is lower than that, at around $455,000.

How does Sacramento compare to other California cities?

Redfin shared data for 40 of the 50 most populous metro areas in the U.S. Here’s how other California cities stack up:

• Anaheim: Investors made up 18.7% of homes purchased at a median home sale price of $1 million.
• Los Angeles: Investors made up 19.1% of homes purchased at a median home sale price of $1.1 million.
• Oakland: Investors made up 13% of homes purchased at a median home sale price of $1 million.
• San Diego: Investors made up 19.8% of homes purchased at a median home sale price of $830,500.
• San Francisco: Investors made up 20.4% of homes purchased at a median sale price $1.9 million.
• San Jose: Investors made up 13.8% of homes purchased at a median sale price of $1.68 million.

San Jose and New York City were the only two metro areas analyzed in which investors’ market share declined. San Francisco observed an increase of less than 1%.