Welcome!

News Feed Item

All-Cash Share of U.S. Home Sales Pulls Back From 3-Year High, Institutional Investor Share Drops to 3-Year Low

Cash Purchases 38 Percent of Q2 Home Sales, Down From 42 Percent in Q1; Institutional Investor Purchases 4.7 Percent of Q2 Sales, Lowest Since Q1 2012; Report Includes Analyses of Subsequent Financing on Cash Sales, Bulk Investor Buys

IRVINE, CA -- (Marketwired) -- 08/19/14 -- RealtyTrac® (www.realtytrac.com), the nation's leading source for comprehensive housing data, today released its Q2 2014 U.S. Institutional Investor & Cash Sales Report, which shows all-cash sales accounted for 37.9 percent of all sales of single family homes and condos nationwide in the second quarter, down from a three-year high of 42.0 percent in the previous quarter but still up from 35.7 percent a year ago.

The report also shows that sales to institutional investors -- entities that purchase at least 10 properties in a calendar year -- accounted for 4.7 percent of all sales of single family homes and condos in the second quarter, down from 5.3 percent in the previous quarter and down from 5.8 percent a year ago to the lowest level since the first quarter of 2012.

"The flurry of purchases by institutional investors and other cash buyers that kicked off two years ago when U.S. home prices hit bottom is finally showing signs of subsiding," said Daren Blomquist, RealtyTrac vice president, noting that the U.S. median home prices bottomed out in March 2012. "Over the past 10 quarters cash sales have accounted for 39 percent of all home sales on average, and institutional investor purchases have accounted for 5.3 percent of all home sales on average. Prior to that, from 2001 to 2011, the average quarterly cash share was 30 percent, and the average quarterly institutional investor share was 2.6 percent."

"This is a classic good news/bad news scenario for the housing market," Blomquist continued. "The good news is that fewer cash buyers should help loosen up inventory of homes for sale and reduce competitive bidding, giving first time homebuyers and other non-cash buyers more opportunities. The bad news is that some of those first time homebuyers and other non-cash buyers may already be priced out of the market thanks to the rapid run-up in home prices over the past two years in many areas."

Cash sales account for larger share of very high-end, low-end and distressed sales
The report shows that U.S. cash sales hit a recent peak of 45.8 percent of all home sales in the first quarter of 2012, when home prices bottomed out, but were down to as low as 34.0 percent of all sales in the third quarter of 2013 before jumping to 36.6 percent in the fourth quarter on the heels of the rise in interest rates and jumping again to 42.0 percent of all sales in the first quarter of 2014, when new qualified mortgage rules from the Consumer Financial Protection Bureau took effect.

Cash sales in the second quarter were skewed higher on both ends of the home price spectrum. Cash sales accounted for 67 percent of purchases of homes selling for $100,000 or less, and cash sales accounted for 45 percent of purchases of homes selling for more than $2 million.

Cash sales represented a larger share of distressed sales, with 49 percent of bank-owned sales, 61 percent of sales of properties in the foreclosure process, and 96 percent of sales at the foreclosure auction. By comparison, non-distressed home sales were 36 percent all-cash.

Cash sales more than half of all sales in Miami, New York, Detroit, Atlanta, Las Vegas
Among metropolitan statistical areas with a population of at least 500,000, those with the top six highest percentages of cash sales were all in Florida: Miami-Fort Lauderdale-Pompano Beach (64.1 percent), Cape Coral-Fort Myers (62.1 percent), Sarasota-Bradenton-Venice (61.5 percent), Tampa-St. Petersburg-Clearwater (54.6 percent), Lakeland (53.0 percent), and Orlando-Kissimmee (52.2 percent). All six metros posted a lower all-cash share of sales than the previous quarter and a year ago.

Other major metro areas with an all-cash share among the top 20 highest nationwide were Las Vegas (50.7 percent), New York (48.2 percent), Detroit (47.7 percent), Kansas City (46.8 percent), Philadelphia (45.1 percent), and Cleveland (45.1 percent).

Analysis of percentage of cash sales with subsequent financing
RealtyTrac analyzed more than 7,500 all-cash transactions for single family homes in Orange County, Calif., between January 2013 and July 2014 to determine what percentage of the properties purchases were subsequently financed by the buyer.

The analysis found that 10 percent of those all-cash purchases had some sort of subsequent mortgage taken out by the owner who purchased with cash. The subsequent financing was recorded on average 136 days after the sale of the property was recorded.

Institutional investor share increases in Las Vegas, Jacksonville, Columbus, Miami
Among metropolitan statistical areas with a population of at least 500,000, those with the highest share of institutional investor purchases in the second quarter were Atlanta-Sandy Springs-Marietta (15.6 percent), Las Vegas-Paradise (14.4 percent), Jacksonville, Fla., (12. 5 percent), Memphis, Tenn. (12.0 percent), and Charlotte-Gastonia-Concord (11.3 percent).

Although Atlanta documented the highest share of institutional investor sales in the second quarter, its 15.6 percent share was down from a 20.6 percent share in the first quarter and a 16.5 percent share in the second quarter of 2013 -- following nine consecutive quarters with year-over-year increases in Atlanta's institutional investor share.

The institutional investor share of home purchases were also down from a year ago in Memphis and Charlotte, but increased from a year ago in Las Vegas and Jacksonville, bucking the national trend.

Other metro areas among the top 10 for institutional investor share with increases from a year ago were Knoxville, Tenn., (10.0 percent compared to 6.9 percent a year ago); Columbus, Ohio (9.2 percent compared to 6.9 percent a year ago); and Miami (8.2 percent compared to 6.7 percent a year ago).

Institutional investor breakdown: price, foreclosure status, financing and bulk sales
The report shows that the second quarter share of institutional investor purchases was the lowest since the first quarter of 2012, when they represented 4.6 percent of all U.S. home sales. The peak in institutional investor share of all sales was 6.0 percent in the first quarter of 2013.

In the second quarter institutional investors purchased homes at an average sale price of $147,017, while the average estimated full market value of the homes purchased was $164,553 at the time of the sale.

The majority of purchases made by institutional investors in the second quarter were all-cash (79 percent) and not in any stage of foreclosure or bank-owned (80 percent). Of the remaining 20 percent, 7 percent were bank-owned, 11 percent were scheduled for a foreclosure auction, and 2 percent were in default with no foreclosure auction date set.

Analysis of institutional investor bulk transactions on single family homes
Among the 29,444 single family homes purchased by institutional investors in the second quarter, 8,856 (29 percent) were bulk transactions involving multiple properties sold on the same date from the same seller and to the same buyer. The 29 percent bulk transactions was down from 31 percent in the previous quarter but still up from 19 percent a year ago.

An analysis of the buyers and sellers involved with the bulk transactions indicated that most of the bulk transactions involve an institutional investor with multiple corporations purchasing properties that are consolidating all of those properties under a single ownership name. A detailed breakdown of buyers and sellers involved in these bulk transactions is available upon request.

Report methodology
The RealtyTrac U.S. Institutional Investor & Cash Sales Report provides percentages of all sales that are sold to institutional investors and cash buyers, by state and metropolitan statistical area. Data is also available at the county and zip code level upon request. The data is derived from recorded sales deeds and loan data. Statistics for previous quarters are revised when each new quarterly report is issued as more deed data becomes available for those previous months.

Special note on methodology change in second quarter of 2014: RealtyTrac adjusted its methodology for calculating cash sales, changing how loan coverage was determined and eliminating data from one of the data providers used in the past.

Definitions
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.

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
RealtyTrac is a leading supplier of U.S. real estate data, with nationwide parcel-level records for more than 129 million U.S. parcels that include property characteristics, tax assessor data, sales and mortgage deed records, Automated Valuation Models (AVMs) and 20 million active and historical default, foreclosure auction and bank-owned properties. RealtyTrac's housing data and foreclosure reports are relied on by many federal government agencies, 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.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
SYS-CON Events announced today that MIRAI Inc. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MIRAI Inc. are IT consultants from the public sector whose mission is to solve social issues by technology and innovation and to create a meaningful future for people.
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
SYS-CON Events announced today that Dasher Technologies will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Dasher Technologies, Inc. ® is a premier IT solution provider that delivers expert technical resources along with trusted account executives to architect and deliver complete IT solutions and services to help our clients execute their goals, plans and objectives. Since 1999, we'v...
SYS-CON Events announced today that TidalScale, a leading provider of systems and services, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. TidalScale has been involved in shaping the computing landscape. They've designed, developed and deployed some of the most important and successful systems and services in the history of the computing industry - internet, Ethernet, operating s...
SYS-CON Events announced today that Massive Networks, that helps your business operate seamlessly with fast, reliable, and secure internet and network solutions, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. As a premier telecommunications provider, Massive Networks is headquartered out of Louisville, Colorado. With years of experience under their belt, their team of...
SYS-CON Events announced today that IBM has been named “Diamond Sponsor” of SYS-CON's 21st Cloud Expo, which will take place on October 31 through November 2nd 2017 at the Santa Clara Convention Center in Santa Clara, California.
Infoblox delivers Actionable Network Intelligence to enterprise, government, and service provider customers around the world. They are the industry leader in DNS, DHCP, and IP address management, the category known as DDI. We empower thousands of organizations to control and secure their networks from the core-enabling them to increase efficiency and visibility, improve customer service, and meet compliance requirements.
In his session at 21st Cloud Expo, Michael Burley, a Senior Business Development Executive in IT Services at NetApp, will describe how NetApp designed a three-year program of work to migrate 25PB of a major telco's enterprise data to a new STaaS platform, and then secured a long-term contract to manage and operate the platform. This significant program blended the best of NetApp’s solutions and services capabilities to enable this telco’s successful adoption of private cloud storage and launchi...
SYS-CON Events announced today that TidalScale will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. TidalScale is the leading provider of Software-Defined Servers that bring flexibility to modern data centers by right-sizing servers on the fly to fit any data set or workload. TidalScale’s award-winning inverse hypervisor technology combines multiple commodity servers (including their ass...
As hybrid cloud becomes the de-facto standard mode of operation for most enterprises, new challenges arise on how to efficiently and economically share data across environments. In his session at 21st Cloud Expo, Dr. Allon Cohen, VP of Product at Elastifile, will explore new techniques and best practices that help enterprise IT benefit from the advantages of hybrid cloud environments by enabling data availability for both legacy enterprise and cloud-native mission critical applications. By rev...
As popularity of the smart home is growing and continues to go mainstream, technological factors play a greater role. The IoT protocol houses the interoperability battery consumption, security, and configuration of a smart home device, and it can be difficult for companies to choose the right kind for their product. For both DIY and professionally installed smart homes, developers need to consider each of these elements for their product to be successful in the market and current smart homes.
Join IBM November 1 at 21st Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA, and learn how IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Cognitive analysis impacts today’s systems with unparalleled ability that were previously available only to manned, back-end operations. Thanks to cloud processing, IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Imagine a robot vacuum that becomes your personal assistant tha...
Companies are harnessing data in ways we once associated with science fiction. Analysts have access to a plethora of visualization and reporting tools, but considering the vast amount of data businesses collect and limitations of CPUs, end users are forced to design their structures and systems with limitations. Until now. As the cloud toolkit to analyze data has evolved, GPUs have stepped in to massively parallel SQL, visualization and machine learning.
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, will lead you through the exciting evolution of the cloud. He'll look at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering ...
SYS-CON Events announced today that N3N will exhibit at SYS-CON's @ThingsExpo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. N3N’s solutions increase the effectiveness of operations and control centers, increase the value of IoT investments, and facilitate real-time operational decision making. N3N enables operations teams with a four dimensional digital “big board” that consolidates real-time live video feeds alongside IoT sensor data a...