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Institutional Investor Share of U.S. Residential Purchases in January Drops to Lowest Level Since March 2012

36 Percent Annual Drop in Investor Share Follows 20 Straight Months of Increases Cash Sales Continue Climb, Short Sales and Foreclosure Sales Down From Year Ago

IRVINE, CA -- (Marketwired) -- 02/27/14 -- RealtyTrac® (www.realtytrac.com), the nation's leading source for comprehensive housing data, today released its January 2014 Residential & Foreclosure Sales Report, which shows that institutional investors -- defined as entities purchasing at least 10 properties in a calendar year -- accounted for 5.2 percent of all U.S. residential property sales in January, down from 7.9 percent in December and down from 8.2 percent in January 2013.

The January share of institutional investor purchases represented the lowest monthly level since March 2012 -- a 22-month low.

Metro areas with big drops in institutional investor share from a year ago included Cape Coral-Fort Myers Fla. (down 70 percent), Memphis, Tenn., (down 64 percent), Tucson, Ariz., (down 59 percent), Tampa, Fla., (down 48 percent), and Jacksonville, Fla., (down 21 percent).

Counter to the national trend, 23 of the 101 metros analyzed in the report posted year-over-year gains in institutional investor share, including Atlanta (up 9 percent), Austin, Texas, (up 162 percent), Denver (up 21 percent), Cincinnati (up 83 percent), Dallas (up 30 percent), and Raleigh, N.C. (up 15 percent).

The report also shows that short sales and foreclosure-related sales -- including both sales to third party buyers at the public foreclosure auction and sales of bank-owned properties -- accounted for a combined 17.5 percent of all U.S. residential sales in January 2014, up from 14.9 percent of all sales in December but down from 18.7 percent a year ago.

"Many have anticipated that the large institutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening," said Daren Blomquist. "It's unlikely that this pullback in purchasing is weather-related given that there were increases in the institutional investor share of purchases in colder-weather markets such as Denver and Cincinnati, even while many warmer-weather markets in Florida and Arizona saw substantial decreases in the share of institutional investors from a year ago."

Local broker quotes
"We have seen the big hedge fund investors entering into particularly the Columbus and Cincinnati markets, trying to buy up portfolios of distressed properties and then turning those properties into rentals, and I think that's contributing to the lower levels of inventory available on the market." said Michael Mahon, Executive Vice President at HER Realtors, covering the Columbus, Cincinnati and Dayton markets in Ohio. "We've also seen a dramatic decrease in short sales because of the expiration of the Mortgage Forgiveness Debt Relief Act, which provided short sellers protection from being taxed on debt forgiven through a short sale."

"Buyers are starting to emerge again, and we are seeing multiple offers on REO properties due to low levels of available homes on the market," said Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty covering the Oklahoma City and Tulsa, Okla., markets. "Increased demand of properties and reduced supply of housing inventory result in price escalation, which explains the continued increase in home prices throughout the market."

"The Denver metro area did not experience the typical winter slowdown that many markets across the country experienced and we continue to be very busy," said Chad Ochsner, owner of RE/MAX Alliance covering the Denver, Colo., market. "Our January year-over-year sales counts are up about 7 percent, which is really encouraging. I think it has a lot to do with improved consumer confidence and low interest rates."

"The Salt Lake Valley market is showing a 5 percent decrease in the number of residential properties sold compared to last year, but the market is still in line with projected home price increases of 5 to 7 percent," said Steve Roney, CEO of Prudential Utah Real Estate covering the Salt Lake City and Park City, Utah markets. "Housing inventories remain low, but are gradually growing as underwater homeowners regain equity positions in their homes."

"The Park City resort market tells a different story with a slight increase in the number of properties sold and a slight decrease in median sales prices. Park City housing inventory is at a historic low with significant demand for entry-level housing and ultra-high-end resort properties," he added.

Other high-level findings from the report:

  • Metro areas with the highest share of institutional investor purchases included Jacksonville, Fla. (25.5 percent), Atlanta (25.1 percent), Austin, Texas (18.0 percent), Charlotte, N.C. (14.9 percent), and Greenville, S.C. (14.0 percent).

  • The share of residential properties sold at the public foreclosure auction in January jumped to 1.5 percent of all residential sales, up from 1.0 percent in December and up from 1.0 percent in January 2013.

  • Metro areas with the highest percentage of foreclosure auction sales included Atlanta (6.2 percent), Salt Lake City (6.0 percent), Charlotte, N.C. (4.6 percent), Las Vegas (4.1 percent), and Miami (3.8 percent).

  • All-cash sales accounted for 44.4 percent of all U.S. residential sales in January, the seventh consecutive month where all-cash sales have been above the 35 percent level.

  • Metro areas with the highest percentage of cash sales included Miami (68.2 percent), Jacksonville, Fla., (66.2 percent), Memphis, Tenn., (64.4 percent), Tampa, Fla. (61.5 percent), and Las Vegas (56.5 percent).

  • Short sales accounted for 5.9 percent of all U.S. residential sales in January, up from 5.4 percent in December but down from 7.4 percent a year ago.

  • States with the highest percentage of short sales were Florida (14.9 percent), Nevada (13.4 percent), Illinois (9.5 percent), New Jersey (8.7 percent) and Maryland (8.0 percent).

  • Sales of bank-owned residential properties accounted for 10.2 percent of all U.S. residential sales in January, up from 8.5 percent in December but down from 10.4 percent a year ago.

  • States with the highest percentage of bank-owned sales were Nevada (23.2 percent), Ohio (21.2 percent), Michigan (19.9 percent), Arizona (16.6 percent), and Illinois (15.8 percent).

  • U.S. residential properties, including single family homes, condominiums and townhomes, sold at an estimated annual pace of 5,126,001 in January, a less than 1 percent increase from the previous month and an 8 percent increase from January 2013.

  • Counter to the national trend, annualized sales volume declined from a year ago in seven states and 17 of the nation's 50 largest metropolitan statistical areas, including San Jose (down 22 percent), Los Angeles (down 16 percent), Phoenix (down 14 percent), Las Vegas (down 11 percent), and Orlando (down 7 percent).

  • The national median sales price of U.S. residential properties -- including both distressed and non-distressed sales -- was $165,957 in January, down 3 percent from December but up 1 percent from January 2013. The 3 percent monthly decrease was the biggest monthly decrease since February 2013.

  • Some of the nation's fastest appreciating markets on a year-over-year basis posted month-over-month decreases in January, including San Francisco (down 2 percent monthly but still up 27 percent annually); Sacramento, Calif. (down 2 percent monthly but still up 25 percent annually); Memphis (down 1 percent monthly but still up 23 percent annually); Cincinnati (down 2 percent monthly but still up 20 percent annually); Phoenix (down 1 percent monthly but still up 19 percent annually); and San Jose (down 2 percent monthly but still up 19 percent annually).

Report methodology
The RealtyTrac U.S. Residential Sales Report provides counts and median prices for sales of residential properties nationwide, by state and metropolitan statistical areas with a population of 500,000 or more. Data is also available at the county level upon request. The report also provides a breakdown of cash sales, institutional investor sales, short sales, bank-owned sales and foreclosure auction sales to third parties. The data is derived from recorded sales deeds and loan data, which is used to determine cash sales and short sales. Sales counts for recent months are projected based on seasonality and expected number of sales records for those months that are not yet available from public record sources but will be in the future given historical patterns. Statistics for previous months are revised when each new monthly report is issued as more deed data becomes available for those previous months.

Residential property sales: sales of single family homes, condominiums/townhomes, and co-ops, not including multi-family properties.

Annualized sales: an annualized estimate of the number of residential property sales based on the actual number of sales deeds received for the month, accounting for expected sales records for that month that will be received in future months as well as seasonality.

Distressed sales: sale of a residential property that is actively in the foreclosure process or bank-owned when the sale is recorded.

Distressed discount: percentage difference between the median price of distressed sales and a non-distressed sales in a given geographic area.

Bank-Owned sales: sales of residential properties that have been foreclosed on and are owned by the foreclosing lender (bank).

Short sales: sales of residential properties where the sale price is below the combined total of outstanding mortgages secured by the property.

Foreclosure Auction sales: sale of a property at the public foreclosure auction to a third party buyer that is not the foreclosing lender.

All-cash purchases: sales where no loan is recorded at the time of sale and where RealtyTrac has coverage of loan data.

Institutional investor purchases: residential property sales to non-lending entities that purchased at least 10 properties in the last 12 months.

Click here for more information on RealtyTrac resources and to view state and metro level charts.

Report License
The RealtyTrac U.S. Residential & Foreclosure Sales report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information contact our Data Licensing Department at 800.462.5193 or [email protected].

About RealtyTrac Inc.
RealtyTrac (www.realtytrac.com) is the leading supplier of U.S. real estate data, with more than 1.5 million active default, foreclosure auction and bank-owned properties, and more than 1 million active for-sale listings on its website, which also provides essential housing information for more than 100 million homes nationwide. This information includes property characteristics, tax assessor records, bankruptcy status and sales history, along with 20 categories of key housing-related facts provided by RealtyTrac's wholly-owned subsidiary, Homefacts®. RealtyTrac's foreclosure reports and other housing data are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.

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