Cash Buyers Account For Over 42% Of Residential Property Sales In Q1

The number of buyers in the US paying cash for properties has reached a new high with the latest figures showing that 42.7% of all residential sales were cash in the first quarter of the year.

This is up from 37.8% in the previous quarter and up from 19.1% in the first quarter of 2013, according to the data from RealtyTrac. It means cash sales are at their highest level since the firm began tracking all cash purchases in the first quarter of 2011.

The report also shows that the share of institutional investor purchases dropped to the lowest level since the first quarter of 2012. Institutional investors accounted for 5.6% of all residential sales in the first quarter, down from 6.8% in the fourth quarter of 2013 and down from 7% in the first quarter of 2013.

‘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.

‘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,’ he explained.

He also pointed out that while the institutional investor purchase share declined in the first quarter in 18 of the top 20 markets for institutional investor share a year ago, home prices continued to appreciate in most of those markets, albeit at a slower pace in many cases.

However he added that there are a couple notable exceptions that could be cause for concern including Jacksonville in Florida where the institutional investor share of purchases was down to 13.5% in the first quarter compared to 18% a year ago and where median home prices decreased 1% from a year ago in March after 15 consecutive months of annual increases.

Another example is Greensboro in North Carolina where the institutional investor of purchases was down to 6.4% in the first quarter compared to 10% a year ago and where median home prices decreased 8% from a year ago in March following 14 of 16 months were median home prices increased annually.

Among metropolitan statistical areas with a population of at least 500,000, those with the top five highest percentages of cash sales were all in Florida. Cape Coral-Fort Myers had 73.6% cash sales, Miami 67.1%, Sarasota 65.1%, Palm Bay 64.1% and Lakeland 61.8%.

Other major metro areas with more than 50% all cash sales included New York with 57%, Columbia in South Caroline with 56.1%, Memphis at 54.9%, Detroit 53.5%, Atlanta 53.2% and Las Vegas 52.2%.

The data also shows that 15% of all cash purchases in the first quarter were properties in the foreclosure process, and 10% were bank owned properties while 52% of all cash purchases in March were sold to buyers with a different mailing address than the property address, indicating investors or second home buyers.
The average sales price of an all cash purchase in the first quarter was $207,668, some 13% below the average estimated full market value of the properties that were purchased which was $237,900.

This article was republished with permission from Property Wire.

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