This sharp decline is due to a combination of elevated interest rates and sliding home prices, which impacts potential future returns. With investors retreating to the sidelines, buyers in the market have dramatically shrunk, and price wars have eased. 

Redfin data shows investors purchased 48.6% fewer homes in the first quarter compared with the same period last year. This was the most significant plunge on record. 

To illustrate just how the Federal Reserve's 14 months of aggressive interest hikes have chilled a major buyer of the residential real estate market, Redfin shows the record-breaking pullback in the chart below: