REO volumes are up 41% year over year, and backlogs are growing at many banks.
That pressure is slowing sales and nudging prices lower in parts of the market.
At the same time, investor purchases dropped to 12.6% in Q2—the lowest since 2020—so there’s less competition on new listings.
Passive Cash-Flowing Properties
Buy shares of investment properties, earn rental income & appreciation for anywhere from $100 to $20k — let Arrived take care of the rest.
Some newer investors who bought near 90%+ of ARV in 2023–2024 now face refinancing at 7%+ and tighter underwriting, which could add to supply.
Credit is tighter in CRE as well, while groups like Cottonwood raise capital to buy discounted debt and assets.
In this edition of the AltReports:
🏦 REO inventory explodes 41% as banks choke on repos
📊 Investor purchases crash to 2020 lows at just 12.6%
🎯 Rookie flippers set for wipeouts as distress floods market
💰 Cottonwood raises $250M war chest for mispriced CRE loans
Video of the Week: Phoenix Housing Alert or Turn-Around?
Chart of the Week: Special Servicing Rate Keeps on Climbing
Podcast of the Week: STOP Chasing Hot Markets (Here's What to Do Instead)
REO Activity Surges 41% Year-Over-Year
Banks are choking on a 41% surge of repossessed homes, and the backlog is ballooning out of control.
That floodgate is stalling sales, pummeling prices and turning the market into a fire-sale playground.
💡 Investor Takeaway: Target bank REO departments at regional banks with 25+ properties in inventory.
Investor Purchases Hit Rock Bottom Since 2020, Distress Ahead
Investor home purchases plunged to their lowest second-quarter level since 2020 at just 12.6%, torpedoed by sky-high rates and brutal affordability.
Big players are stepping off the gas, peeling away from deals and thinning out competition in an already tight market.
💡 Investor Takeaway: Target markets where investor activity dropped 30%+ and build relationships with trustees handling bulk REO portfolios.
Rookie Real Estate Investors Are Screwing Up Just as Distressed Deals Hit the Market
Newbie investors keep overpaying for show-off properties and skipping due diligence, setting themselves up for wipeouts.
Tumbling markets, higher rates, and a credit crunch are about to flood the zone with distressed listings worse than a post-party dumpster fire.
💡 Investor Takeaway: Focus on properties where inexperienced flippers paid 90%+ of ARV in 2023-2024 and are now facing refinancing with 7%+ rates.
Cottonwood Taps $250M for Distressed Deals as Credit Clamps Down
The commercial real estate credit market has seized up, leaving lenders hoarding cash and deals drying up.
Cottonwood is racing to raise $250 million for Fund VI to pounce on mispriced loans and distressed assets now trading at fat discounts.
💡 Investor Takeaway: Focus on office/retail properties with 2025-2026 maturity dates and borrowers with 1.1x DSCR or lower.