RealtyTrac: All-Cash Sales Hit New Low In May

Posted by Patrick Barnard on July 06, 2015 No Comments
Categories : Residential Mortgage

About 24.6% of all single-family home and condo sales in May were all-cash purchases – down from 28.5% in April and down from 30.4% in May 2014 to reach the lowest level since November 2009, a report from RealtyTrac shows.

In fact, cash sales in May nearly matched the level seen in January 2000 (24.8%), according to the firm's May 2015 U.S. Home & Foreclosure Sales Report.

All-cash sales peaked at about 42.2% in February 2011, the firm's research shows.

The share of institutional investors – entities purchasing at least 10 properties in a calendar year – dropped to 2.4% of single-family home sales in May.

Craig King, chief operating officer at Chase International brokerage, covering the Lake Tahoe and Reno, Nev., markets, says the reduction in the number of all-cash buyers is good news for first-time home buyers.

‘Interest rates remain historically low, and the outlook for price appreciation is great,’ King says in a statement. ‘The competition in the market place is also different. While inventory is tight, many investors have dropped out of the market and cash deals are not as prevalent as they were. Even in multi-offer situations, much has been equalized. This is great news for first-time buyers.’

The median sales price of a residential property – including both distressed and non-distressed sales – in May was $173,900, up 4% from April but down 1% compared to May 2014. The median sales price of non-distressed properties was $205,000; while the median sales price of distressed properties was $116,192.

May was the second consecutive month where median sales prices nationwide were down on a year-over-year basis following 36 consecutive months of year-over-year increases, according to the report.

What's more, it was the first month with a year-over-year decrease in distressed median sale prices following 13 consecutive months with year-over-year increases.

‘Distressed sales in May represented a significantly smaller share of a growing home sales pie as an increasing number of non-distressed sellers continued to cash out on the equity they've gained over the last three years of rising home prices,’ explains Daren Blomquist, vice president at RealtyTrac. ‘But those distressed sales are still acting as a drag on home prices, selling at a median price that is 43 percent below the median price of a non-distressed sale – the biggest gap we've seen since we began tracking that distressed discount in January 2006.

‘As housing transitions from an investor-driven, cash-is-king market to one more dependent on traditional buyers, sales volume has been increasing over the last few months and is on track in 2015 to hit the highest level we've seen since 2006,’ Blomquist adds. ‘And while sellers this spring are realizing the biggest average home value gains since 2006, home price appreciation is softening as the supply-and-demand balances tip more in favor of buyers and as banks began to clear out some of their more highly distressed foreclosures that sell at scratch-and-dent prices.’

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