Retail data firm RealtyTrac reported investors and other cash buyers are purchasing fewer homes. As a result, the flow of cash purchases that disrupted some mortgage markets may be slowing, the firm said.
The Irvine, Calif.-based RealtyTrac is a leading source of real estate data, particularly foreclosure activity.
Nationally, 37.9% of all homes purchased in second quarter of 2014 were purchased for cash, RealtyTrac reported. That figure was down from a three-year high of 42% in 2014's first quarter; however, the number was higher than the 35.7% of homes purchased for cash in the second quarter of 2013, the firm reported.
“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 U.S. median home prices bottomed out in March 2012. “Over the past 10 quarters, cash sales have accounted for 39% of all home sales on average, and institutional investor purchases have accounted for 5.3% of all home sales on average. Prior to that, from 2001 to 2011, the average quarterly cash share was 30%, and the average quarterly institutional investor share was 2.6%
The numbers represent a good news/bad news scenario for the housing market, Blomquist said.
“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,” he said.
The report found that cash real estate purchases in the second quarter were weighted more heavily on both ends of the real estate price spectrum. While cash purchased 37.9% of homes overall, it purchased 67% of homes selling for $100,000 or less and 45% of homes selling for more than $2 million, the report said.
RealtyTrac reported seven metropolitan areas where cash purchases represented more than 50% of second quarter sales, with six in Florida and one in Nevada. The six Florida metropolitan areas included Miami (64.1% purchases in cash), Fort Myers (62.1%), Sarasota (61.5%), Tampa (54.6%), Lakeland (53%) and Orlando (52.2%). The one Nevada community with higher than 50% real estate purchases for cash was Las Vegas (50.7%), the report said.
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