Did Investors buying last quarter cause the previous two years of price increases?

TL;DR: Probably not.

Not That Much Longer;Did Read:

The basic thesis is that increasing investor activity is a large cause of the price appreciation homes have seen over the last 2 years. I am actually not addressing whether or not that may be but, instead THE DEFINITIVE PROOF offered in this article, is profoundly lacking and at best actually says the opposite.

In the first quarter of 2022, investors made up a record 28% of single-family home sales, according to a report published last week by the Harvard Joint Center for Housing Studies. That's up from 19% in the first quarter of 2021.

That finding is backed up by a separate Redfin analysis, which looked at all home sales (unlike Harvard's single-family homes analysis). In the first quarter of 2022,

Look no further than Ohio, which saw the share of investor homes sales jump in Cincinnati (up 2.9 percentage points), Cleveland (up 3.1 percentage points), and Columbus (up 7 percentage points). Between the first quarter of 2021 and the first quarter of 2022,

Researchers at Freddie Mac, who did their own analysis of public records, found a more modest jump in investor purchases than Harvard and Redfin researchers. Between December 2019 and December 2021, Freddie Mac found investor home purchases climbed from 26.7% to 27.6%.

Chart showing investor selling homes.

For those of you that need a reminder of the timeline. COVID struck in March of 2020 Home sales collapsed in April and May, then rebounded with year over year real (much of the reported average and median increases in 2H of 2020 were actually almost wholly composition effects with people using the Feds gifted 17% increase in purchasing power to not only bring purchases forward but also purchasing larger and newer houses) price appreciation becoming apparent in the last quarter of 2020 and growing through 2021 before moderating in 2022.

What is the evidence presented that investors caused this?

1. Investors are buying more today when price appreciation is moderating than they were when price appreciation was accelerating.

2. Investors are buying more today when price appreciation is moderating than they were when price appreciation was accelerating.

3. Investors are buying more today when price appreciation is moderating than they were when price appreciation was accelerating.

4. Investor activity didn't actually change between pre-COVID and post-COVID when price appreciation was accelerating.

5. Evidence of an investors selling homes through the end of 2021 and into 2022 is the exact opposite of your thesis. So, I don't really understand your point here.

In the end, investor activity may have increased the pricing pressure but this set of DEFINITIVE PROOF is incredibly suggestive of the opposite, actually.