Home Sales Report: All-Cash Buyers Drop to Lowest Level Since November 2009

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RealtyTrac released its May 2015 U.S. Home & Foreclosure Sales Report, which shows that all-cash sales are down to their lowest levels since November 2009 — down almost 6% from last year and almost 4% from the previous month.

In fact, cash sales seem to be heading back down to more normal long-term levels. May also saw median sales prices down over last year — the second month in a row following 36 months of gains. Purchases by institutional investors dropped to a record low of just 2.4%.

Chase International COO Craig King says, “For the potential first time homebuyer or move up buyer this is a good time to move ahead. Interest rates remain historically low, and the outlook for price appreciation is great. 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.”

Related: What Famous Billionaire Investors Have to Say About Current Market Conditions

Distressed Sales Are Down

“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,” said 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 continued. “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.”

Bank-owned sales were down 3% over last month and more than 5% over last year. Properties that were in-foreclosure were down as well.

via: RealtyTrac

via: RealtyTrac

Housing Prices Are Up

The median sales price of non-distressed residential properties that sold in May was $205,000, up 6 percent from the previous month and up 9 percent from a year ago. May was the 37th consecutive month where non-distressed median home prices have increased on a year-over-year basis.

South Florida Hitting New Heights

Remember all those foreclosures in Florida? It used to be a great place to pick up properties for next to nothing. But Florida is bouncing back and while there are still bargains to be found, you have to look a lot harder for them now.

Related: How to Profit From a Hot Real Estate Market (Even if it’s a Bubble)

“The South Florida real estate market is the healthiest and most balanced in a decade. Real buyers and real sellers are back as we see the investor and distressed market fade,” said Mike Pappas, CEO and president of Keyes Company. “Our affordability factor is still strong due to reasonable pricing and low interest rates. With our economy strengthening on all fronts our future looks bright.”

What Does This Mean For Investors?

If you have been following housing for the last year or so, this comes as no surprise to you. And since you are reading BiggerPockets, you probably have been following housing prices. Deals are getting tougher to find as prices increase, supply decreases, and distressed homes get cleared out of the market.

This overall trend has not yet hit my local market in Northern Colorado — I am still seeing most sub-$300,000 houses selling for above asking price, with contingencies, inspections and appraisals waived, and yes, all-cash sales. But as the data suggests, this is slowing nationwide.

So how about you? What does your local market look like? Have you noticed a slow down in all-cash purchases?

Leave me a comment, and let’s discuss!

About Author

Mindy Jensen

Mindy has flipped numerous homes in the past 10 years, one at a time and doing much of the work with her husband. She lives in Longmont, CO, and is always looking for an ugly duckling to turn into a swan.

2 Comments

  1. John Thedford

    SW Florida is still booming. We are seeing multiple offers on properties. There are still lots of investors seeking properties. We still have lots of competition and the percentage of cash buyers is still over 50% locally.

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