News Column

Cash Purchases Jump to 40 Percent of All Sales in July as Sales Volume Drops in Fastest-Appreciating Markets According to RealtyTrac Residential Sales Report

Aug 29 2013 12:00AM

Marketwire

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IRVINE, CA -- (Marketwired) -- 08/29/13 -- RealtyTrac® (www.realtytrac.com), the nation's leading source for comprehensive housing data, today released its July 2013 U.S. Residential & Foreclosure Sales Report, which shows that U.S. residential properties sold at an estimated annualized pace of 5.5 million in July 2013, up 4 percent from the previous month and up 11 percent from a year ago -- the biggest annual increase in sales volume so far this year.

While sales volume continued to increase nationwide, eight states posted annual decreases in total sales, including California (down 17 percent), Arizona (down 11 percent), Nevada (down 7 percent), and Georgia (down 2 percent). Those four states also posted the four biggest annual increases in median home prices in July: California (up 31 percent); Nevada (up 27 percent); Arizona (up 21 percent); and Georgia (up 20 percent).

The national median sales price was $174,500 in July, up 4 percent from the previous month and up 6 percent from a year ago -- the 16th consecutive month where median home prices nationwide have increased annually after bottoming in March 2012. The median price of a distressed sale -- in foreclosure or bank owned -- was $120,000, up 1 percent from the previous month but down 1 percent from a year ago and 37 percent below the median sales price of a non-distressed residential property.

"Low inventory of homes available for sale is proving to be a double-edged sword in many local housing markets that have bounced back quickly from the real estate slump," said Daren Blomquist, vice president at RealtyTrac. "Home prices are accelerating rapidly in these markets thanks to the combination of low supply and strong demand. However, counter to the national trend, sales volume in these markets is down even as the percentage of cash sales rises, indicating there is still strong demand but that buyers who need financing to purchase are increasingly left out in the cold."

"The recent uptick in interest rates could also be contributing to a higher percentage of cash purchases as some non-cash buyers can no longer afford to buy, particularly in high-priced markets," Blomquist added.

Other high-level findings from the report:

•All-cash purchases nationwide accounted for 40 percent of all sales of residential property in July, up from 35 percent of all sales in June and up from 31 percent of all sales in July 2012. Among the nation's 20 largest metro areas, those with the biggest month-over-month jumps in cash sales share were Dallas (up 82 percent), St. Louis (up 66 percent), Los Angeles (up 32 percent), Riverside-San Bernardino in Southern California (up 26 percent), Seattle (up 21 percent), and Phoenix (up 21 percent).

•Short sales (where the sale price is below the combined total of outstanding mortgages secured by the property) accounted for 14 percent of all residential sales in July, up from 13 percent in June and up from 9 percent in July 2012. States with the highest percentage of short sales in July included Nevada (35 percent), Florida (30 percent), Maryland (20 percent), Washington (19 percent), and Tennessee (19 percent).

•Institutional investor purchases (sales to non-lending entities that purchased at least 10 properties in the last 12 months) accounted for 9 percent of all residential sales in July, the same percentage as in the previous month and also the same percentage as in July 2012. Metro areas with the highest percentage of institutional investor purchases included Atlanta (25 percent), Tampa (22 percent), Palm Bay, Fla., (20 percent), Greenville, S.C. (19 percent), and Charlotte, N.C. (19 percent).

•Sales of bank-owned properties (REO) accounted for 9 percent of all residential sales in July, also the same percentage as the previous month and a year ago. Metro areas with the highest percentages of REO sales included Detroit (26 percent), Modesto, Calif. (25 percent), Stockton, Calif., (24 percent), Las Vegas (24 percent), and Cleveland (20 percent).

•Among 20 of the nation's largest metro areas with annual sales estimates tracked in the report, the biggest year-over-year decreases in sales volume were in San Francisco (down 20 percent), Los Angeles (down 20 percent), San Diego (down 19 percent), Riverside-San Bernardino (down 14 percent), Phoenix (down 13 percent), and Atlanta (down 8 percent).

•Among 20 of the nation's largest metro areas with annual sales estimates tracked in the report, the biggest year-over-year increases in sales volume were in Chicago (up 27 percent), Minneapolis (up 23 percent), Baltimore (up 21 percent), Boston (up 20 percent), and Philadelphia (up 20 percent).

•Major metro areas where median residential property prices increased 20 percent or more from a year ago in July included Los Angeles (up 29 percent), Atlanta (up 24 percent), San Francisco (up 35 percent), Riverside-San Bernardino (up 26 percent), and Phoenix (up 25 percent).


Local broker perspectives
"The Northern Utah market is significantly stronger than last year with an increase in both sales volume and the number of new listings we have to offer," said Steve Roney, CEO of Prudential Utah Real Estate. "Distressed sales have had a minimum impact on our area as they have been overwhelmed by the return to healthy market conditions."

"California saw a decrease in sales during the month of July because of the severely limited inventory that existed in April and May," said Rich Cosner, President of Prudential California Realty, covering Orange, Riverside and San Bernardino counties in Southern California. "The overall pace of sales going into escrow has remained steady as buyers are finding it easier to find a home, and inventory in many Southern California markets has doubled."

"The increase in completed short sales in July is a result of the frenzied buying pace during the first few months of the year when the seasonal activity increased tremendously," said Craig King, COO of Chase International, covering the Reno and Lake Tahoe markets. "With almost 40 percent of homeowners in the Reno-Sparks area still underwater on their mortgages we should continue to see some short sales but overall the number of new short sales coming on the market is declining as we return to a normalizing market place and a return of equity sales."

"The New York market has been increasing at a slow and steady rate simply because the New York market did not fall as hard as many other markets across the country," said Emmett Laffey, CEO of Laffey Fine Homes International, covering Long Island and the five boroughs of New York City. "Remember slow and steady wins the race."

"Active residential property listings are down 16 percent in the Tulsa and Oklahoma City markets," said Sheldon Detrick CEO of Prudential Detrick/Prudential Alliance Realty, covering the Oklahoma City and Tulsa markets. "I don't think Oklahoma has ever had a shortage of inventory like it does today."

Detrick added that increasing cash sales nationwide are a concern, especially given the adoption of the Qualified Mortgage guidelines set to take effect Jan. 10 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

"That is going to put more pressure on the lenders to be a lot more circumspect about who can qualify for a loan," Detrick said. "It's going to require 20 percent down on all loans and higher credit scores, and there are some estimates out there that possibly 25 percent to 43 percent of buyers will not be able to qualify for a loan after January 10th. Now that is scary."

Report methodology
The RealtyTrac U.S. Residential Sales Report provides counts and median prices for sales of residential properties nationwide, by state and metropolitan statistical areas with a population of 500,000 or more. Data is also available at the county level upon request. The report also provides a breakdown of cash sales, institutional investor sales, short sales and bank-owned sales. The data is derived from recorded sales deeds and loan data, which is used to determine cash sales and short sales. Sales counts for recent months are projected based on seasonality and expected number of sales records for those months that are not yet available from public record sources but will be in the future given historical patterns.

Definitions
Residential property sales: sales of single family homes, condominiums/townhomes, and co-ops, not including multi-family properties.

Annualized sales: an annualized estimate of the number of residential property sales based on the actual number of sales deeds received for the month, accounting for expected sales records for that month that will be received in future months as well as seasonality.

Distressed sales: sale of a residential property that is actively in the foreclosure process or bank-owned when the sale is recorded.

Distressed discount: percentage difference between the median price of distressed sales and a non-distressed sales in a given geographic area.

Bank-Owned sales: sales of residential properties that have been foreclosed on and are owned by the foreclosing lender (bank).

Short sales: sales of residential properties where the sale price is below the combined total of outstanding mortgages secured by the property.

All-cash purchases: sales where no loan is recorded at the time of sale and where RealtyTrac has coverage of loan data.

Institutional investor purchases: residential property sales to non-lending entities that purchased at least 10 properties in the last 12 months.

Click here to learn about RealtyTrac's report methodology and to view detailed data by metro area and state including residential sales counts, median prices and types of sales.

Report License
The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information contact our Data Licensing Department at 800.462.5193 or datasales@realtytrac.com.

About RealtyTrac Inc.
RealtyTrac (www.realtytrac.com) is the leading supplier of U.S. real estate data, with more than 1.5 million active default, foreclosure auction and bank-owned properties, and more than 1 million active for-sale listings on its website, which also provides essential housing information for more than 100 million homes nationwide. This information includes property characteristics, tax assessor records, bankruptcy status and sales history, along with 20 categories of key housing-related facts provided by RealtyTrac's wholly-owned subsidiary, Homefacts®. RealtyTrac's foreclosure reports and other housing data are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.

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