RealtyTrac: Investor Activity Starting To Wane

Posted by Patrick Barnard on March 04, 2014 No Comments
Categories : Residential Mortgage

A recent report from RealtyTrac shows that the level of institutional investor activity in the housing market has decreased in recent months; however, the level of activity remains at an all-time high.

According to the firm's Residential & Foreclosure Sales Report, institutional investors – defined as entities purchasing at least 10 properties in a calendar year – accounted for 5.2% of all residential property sales in January, down from 7.9% in December and down from 8.2% in January 2013.

Metro areas that experienced the biggest drops in investor activity from a year ago included Cape Coral-Fort Myers Fla. (down 70%); Memphis, Tenn. (down 64%); Tucson, Ariz. (down 59%); Tampa, Fla. (down 48%); and Jacksonville, Fla. (down 21%).

Metro areas where investor activity increased the most, year over year, included Atlanta (up 9%); Austin, Texas (up 162%); Denver (up 21%); Cincinnati (up 83%); Dallas (up 30%); and Raleigh, N.C. (up 15%).

All-cash sales accounted for 44.4% of all residential sales in January – the seventh consecutive month where all-cash sales have been above the 35% level.

The report also shows that short sales and foreclosure-related sales – including both sales to third-party buyers at the public foreclosure auction and sales of bank-owned properties – accounted for a combined 17.5% of all residential sales in January, up from 14.9% of all sales in December but down from 18.7% a year ago.

‘Many have anticipated that the large institutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening,’ says Daren Blomquist, in a statement. ‘It's unlikely that this pullback in purchasing is weather-related, given that there were increases in the institutional investor share of purchases in colder-weather markets such as Denver and Cincinnati, even while many warmer-weather markets in Florida and Arizona saw substantial decreases in the share of institutional investors from a year ago.’

Metro areas with the highest share of institutional investor purchases in January included Jacksonville, Fla. (25.5%); Atlanta (25.1%); Austin, Texas (18%); Charlotte, N.C. (14.9%); and Greenville, S.C. (14%).

Metro areas with the highest percentage of cash sales included Miami (68.2%); Jacksonville, Fla. (66.2%); Memphis, Tenn. (64.4%); Tampa, Fla. (61.5%); and Las Vegas (56.5%).

The share of residential properties sold at the public foreclosure auction in January jumped to 1.5% of all residential sales, up from 1% in December and up from 1% in January 2013.

Metro areas with the highest percentage of foreclosure auction sales included Atlanta (6.2%); Salt Lake City (6%); Charlotte, N.C. (4.6%); Las Vegas (4.1%); and Miami (3.8%).

Short sales accounted for 5.9% of all residential sales in January, up from 5.4% in December but down from 7.4% a year ago.

States with the highest percentage of short sales were Florida (14.9%), Nevada (13.4%), Illinois (9.5%), New Jersey (8.7%) and Maryland (8%).

Sales of bank-owned residential properties accounted for 10.2% of all residential sales in January, up from 8.5% in December but down from 10.4% a year ago.

States with the highest percentage of bank-owned sales for the month were Nevada (23.2%), Ohio (21.2%), Michigan (19.9%), Arizona (16.6%) and Illinois (15.8%).

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