Similarly, investors saw their market share shrink for the second quarter in a row as they held off on making home purchases, buying around 65,000 homes in the metropolitan areas included in Redfin’s third quarter report. This equated to 17.5% of all homes purchased in the third quarter, down 19.5% from the second quarter and 18.2% below last year, but still slightly above 15% pre-pandemic.

Additionally, investors bought $42.4 billion worth of homes in the third quarter. This was 26.3% below the $57.6 billion figure from a year ago and 30.5% down from $61 billion in the last quarter. The typical home purchased by investors was found to have cost $451,975, 6.4% above the previous year but 4.3% down from the quarter prior.

“It’s unlikely that investors will return to the market in a big way anytime soon. Home prices would need to fall significantly for that to happen,” said Sheharyar Bokhari, senior economist at Redfin. “This means that regular buyers who are still in the market are no longer facing fierce competition from hordes of cash-rich investors like they were last year.”

‘Pandemic boomtowns’ see largest declines

Among the 40 metros analyzed by Redfin, investor purchases slumped the most in the markets that accelerated rapidly during the pandemic. These so-called pandemic boomtowns include Phoenix, which saw the largest fall at 49.4%, as well as Las Vegas (-44.8%), Sacramento (-43.2%), Miami (-37.7%) and San Diego (-34.5%).

Investors also lost market share in 14 metros, with Charlotte and Phoenix seeing the most significant drops. In Charlotte, investor purchases accounted for 25.2% of all homes purchased, down from 32.3% last year. In Phoenix, their purchases accounted for 25.8%, down from 31.9%.