RealtyTrac 2014 1st Quarter Report: Cash Share of U.S. Residential Property Sales Reach New High-Cash Is King!

RealtyTrac (www.realtytrac.com), the nations leading source for comprehensive housing data, released its Q1 2014 U.S. Institutional Investor & Cash Sales Report, which shows the share of all-cash sales reached a new high in the first quarter even as the share of institutional investor purchases dropped to the lowest level since the first quarter of 2012.

Editor's Note from Kathy Sperl Bell: Cash is king in real estate! According to Kevin G. Hall of McClatchys Washington Bureau on www.newsobserver.com, "One in three buyers are paying cash, a record high number. The trend is being driven by retiring baby boomers and rich investors, who unlike most first-time buyers can bypass tighter lending requirements to pay cash. Locally, we are seeing Boomer Clients paying cash or mostly cash because they are moving to Delaware from states where the homes they are selling have appreciated significantly over the 25 or more years they lived there. Some of our clients are even purchasing ahead of retirement to take advantage of home prices that are still quite reasonable but beginning to climb.

Money Talks... 42.7 % of all U.S. Residential Property Sales Were Cash Purchases

The report shows 42.7 percent of all U.S. residential property sales in the first quarter were all-cash purchases, up from 37.8 percent in the previous quarter and up from 19.1 percent in the first quarter of 2013 to the highest level since RealtyTrac began tracking all-cash purchases in the first quarter of 2011.

All-cash purchases are defined: sales where no loan is recorded at the time of sale and where RealtyTrac has coverage of loan data. Strict lending standards combined with low inventory continue to give the advantage to investors and other cash buyers in this housing market, said Daren Blomquist, vice president at RealtyTrac.

Other high-level findings from cash purchases data:

• 15 percent of all-cash purchases in the first quarter were properties in the foreclosure process, and 10 percent were bank-owned properties.

• 11 percent of all-cash purchases in the first quarter were to institutional investors, investors buying at least 10 properties in a calendar year.

• 52 percent of all-cash purchases in March (most recent months data only available for this metric) were sold to buyers with a different mailing address than the property address indicating investors or second-home buyers. That compares to 34 percent of all sales cash and financed sold to investors or second-home buyers in March.

• The average sales price of an all-cash purchase in the first quarter was $207,668 13 percent below the average estimated full market value of the properties that were purchased: $237,900.

Other high-level findings from institutional investor data:

Institutional investors entities that have purchased at least 10 properties in a calendar year accounted for 5.6 percent of all U.S. residential sales in the first quarter, down from 6.8 percent in the fourth quarter of 2013 and down from 7.0 percent in the first quarter of 2013 to the lowest level since the first quarter of 2012. The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers including individual investors, second-home buyers and even owner-occupant buyers to fill the vacuum of demand left by institutional investors.

• 84 percent of all institutional investor purchases were all-cash purchases in the first quarter.

• 35 percent of institutional investor purchases were properties built in 2000 or later, and 50 percent were built in 1990 or later.

• 30 percent of all institutional investor purchases were properties in the foreclosure process, and 15 percent were bank-owned properties.

• The average sales price of institutional investor purchases in the first quarter was $128,747 18 percent below the average after repair estimated market value of the homes being purchased: $156,529.

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