IRVINE, Calif. – May 1, 2015 – Buyer demand is strong even though institutional home investors (companies that buy at least 10 properties per year) have cut back on purchases.
However, a study by RealtyTrac, the Q1 2015 Cash, Investor & Distressed Sales Report, suggests that renters aren’t stepping in to fill the void – smaller real estate investors are now entering the market, and many times taking out a mortgage to pay for the property.
According to RealtyTrac, owner-occupant buyers accounted for 63.2 percent of all residential single-family home and condo sales in the first quarter of 2015, down from 65.8 percent the previous quarter and 68.6 percent a year ago.
It’s the lowest quarterly level since RealtyTrac started collecting data in the first quarter of 2011.
Meanwhile, non owner-occupant buyers – any buyer who purchased a property but has their property tax bill mailed somewhere else – reached a new high of 36.8 percent in the first quarter of 2015 – the highest level since the first quarter of 2011. Of these non-owner-occupant buyers, 44.7 percent paid cash, a decline year-to-year when 61.0 percent paid cash. That’s also the lowest quarterly level since RealtyTrac started collecting data in 2011.
A total of 14,621 single family homes sold to institutional investors in the first quarter: 3.4 percent of all sales and almost half the percentage of 6.2 percent a year ago.
“The first quarter sales data broken down by owner-occupancy status suggest two important trends in the housing market,” says Daren Blomquist, vice president at RealtyTrac. “First, investor activity continues to represent a disproportionately high share of all home sales activity in this housing recovery; but unlike the past three years, the large institutional investors are backing out while the smaller, mid-tier and mom-and-pop investors are remaining active.
“The second trend is that a growing number of investors are not buying all-cash, but instead are taking advantage of the broader set of financing options now available to them thanks to a new crop of nationwide companies that have emerged offering financing specifically for investment properties,” Blomquist adds.
Top investor larger metro areas
Among metros with a population of at least 500,000 and with sufficient housing data the top metros for overall investor purchases were in Cape Coral, Florida (60.4 percent), Detroit, Michigan (59.3 percent), Sarasota, Florida (59.0 percent), Lakeland, Florida (50.8 percent), and Columbus, Ohio (50.5 percent).
In the first quarter, 7.3 percent of homes sold were somewhere in the foreclosure process, down from 8.6 percent a year ago. REO (Real Estate Owned) sales, where a sale of the property occurs while the property is bank owned, accounted for 7.2 percent, down from 12.9 percent a year ago.
The Chicago, Illinois metro area led the nation for share of homes sold while in the foreclosure process at 15.7 percent followed by Las Vegas, Nevada (13.7 percent), Jacksonville, Florida (12.4 percent), Milwaukee, Wisconsin (12.3 percent) and Toledo, Ohio (12.3 percent).
Florida metros led the nation for REO sales led by Palm Bay, Florida (15.3 percent), Orlando, Florida (15.3 percent), Jacksonville, Florida (14.1 percent) and Tampa, Florida (13.2 percent).
All-cash buyers accounted for 25.9 percent of all single family home and condo sales in the first quarter of 2015, down from 30.3 percent in the fourth quarter of 2014 – a four-year low.
Among metropolitan statistical areas with a population of at least 500,000, Miami had the highest share of all-cash sales in the first quarter of 2015 – 51.5 percent – followed by Sarasota, Florida (50.8 percent), Cape Coral, Florida (50.5 percent), Tampa, Florida (43.2 percent) and Lakeland, Florida (43.0 percent).
“Miami real estate is a magnet for world money. We continue to see strong investment from our South and Central American neighbors and also strong Canadian interest,” says Mike Pappas, CEO and president of the Keyes Company in South Florida.
Metros with highest share of institutional investors
Among metropolitan statistical areas with a population of at least 500,000, Memphis, Tennessee posted the highest share of institutional investor purchases of single family homes in the first quarter of 2015 – 14.1 percent – followed by Charlotte, North Carolina (12.1 percent), Atlanta, Georgia (9.6 percent), Jacksonville, Florida (8.5 percent) and Oklahoma City, Oklahoma (7.6 percent).
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