Sales Volume Slips in February, Institutional Buyers Pull Back, Distressed Sales Fall

RealtyTrac® , released its February 2014 Residential & Foreclosure Sales Report on March 27th, showing that U.S. residential properties, including single family homes, condominiums and town homes, sold at an estimated annual pace of 5,083,241 in February, a 0.2 percent decrease from the previous month but still up 7 percent from a year ago  February marked the fourth consecutive month where sales activity has decreased on a monthly basis. The decrease in sales volume nationwide was driven by monthly decreases in 31 states. Meanwhile sales volume decreased on a year-over-year basis in six states, including Massachusetts, California, Arizona and Nevada, and 21 of the nation’s 50 largest metro areas, including seven California markets along with Phoenix, Orlando, Las Vegas and Detroit, among others.

“Supply and demand have reached a bit of a standoff in this uneven real estate recovery,” said Daren Blomquist, vice president at RealtyTrac. “The supply of distressed properties — which buyers and investors have come to rely on over the past few years — is evaporating quickly in most markets, but that dwindling supply is not being adequately replenished by non-distressed homeowners listing their homes or by new homes being built. Meanwhile, a key source of demand over the past two years — institutional investors purchasing single family homes as rentals — is starting to decline, and it’s not yet clear if that diminishing demand will be filled by first-time home buyers and move-up buyers.”

Distressed sales and short sales account for 17 percent of all sales in February Short sales and distressed sales — in foreclosure or bank-owned — accounted for 16.9 percent of all U.S. sales in February, up from 16.1 percent of sales in January but down from 19.1 percent of sales in February 2013. The median price of distressed properties — in foreclosure or bank-owned — was $96,606 in February, 44 percent below the median price of non-distressed properties: $172,339. Short sales nationwide accounted for 5.7 percent of all sales, up from 5.5 percent in January but down from 6.9 percent a year ago. Metro areas with the highest percentage of short sales included Las Vegas (17.0 percent), Orlando (16.8 percent), Tampa (14.9 percent), Memphis (14.5 percent), and Miami (12.3 percent). The percentage of short sales decreased from a year ago in all of these metros.

Institutional investor share down nationwide, up mostly in South, Midwest Institutional investors — entities that have purchased at least 10 properties in a calendar year — accounted for 5.9 percent of all U.S. residential property sales in February, up from a revised 5.0 percent of sales in January but down from 7.2 percent of sales in February 2013. February was the third consecutive month where the institutional investor share of sales declined on a year-over-year basis after 19 consecutive months of year-over-year increases.

  • 91 percent of all institutional investor purchases in February were all-cash
  • 17 percent of all institutional investor purchases were properties in foreclosure or bank-owned
  • 81 percent of all institutional investor purchases were properties priced $200,000 or lower
  • 63 percent of all institutional investor purchases were properties with between 1,000 and 2,000 square feet
  • 55 percent of all institutional investor purchases were properties built in 1990 or later

Among metropolitan statistical areas with a population of 500,000 or more, cities with the highest share of institutional investor purchases in February were Atlanta (25.2 percent), Columbus, Ohio, (21.4 percent), Knoxville, Tenn., (18.2 percent), Phoenix (15.2 percent), and Cape Coral-Fort Myers, Fla. (14.8 percent).

 

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