The all-cash share of U.S. home purchases in May dropped to the lowest level since November 2009, with institutional investor purchases dropping to a 15-year low, a new report from RealtyTrac.com shows.
The cash sales share in May was close to its long-term average going back to January 2000 of 24.8 percent and well below its recent peak of 42.2 percent in February 2011. The share of institutional investors — entities purchasing at least 10 properties in a calendar month — dropped to 2.4 percent of single family home sales in May, a record low going back to January 2000, the earliest month with data available, according to RealtyTrac’s May 2015 U.S. Home and Foreclosure Sales Report.
Distressed housing sales are drying up
Daren Blomquist
“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,” Daren Blomquist, vice president at RealtyTrac, said in the release.
“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 said in the release.
“And while sellers this spring are realizing the biggest average equity 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.”
The RealtyTrac.com May 2015 U.S. Home & Foreclosure Sales Report shows 24.6 percent of all single family home and condo sales in May were all-cash purchases, down from 28.5 percent in the previous month and down from 30.4 percent a year ago to the lowest level since November 2009.
“For the potential first time homebuyer or move up buyer this is a good time to move ahead,” Craig King, COO at Chase International brokerage Reno, Nevada said in the release. “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.“
The median sales price of residential properties — including both distressed and non-distressed properties — that sold in May was $173,900, up 4 percent from the previous month but down 1 percent from a year ago. May was the second consecutive month where median sales prices nationwide were down on a year-over-year basis following 36 consecutive months of year-over-year increases.
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.
Meanwhile the median sales price of distressed residential properties — those that were in some stage of foreclosure or bank-owned — that sold in May was $116,192, up less than 1 percent from the previous month but down 2 percent from a year ago. May was the first month with a year-over-year decrease in distressed median sale prices following 13 consecutive months with year-over-year increases.
The median sales price of a distressed residential property was 43 percent below the median sales price of a non-distressed residential property in May, the biggest distressed discount since January 2006 when RealtyTrac first began tracking this metric.
Share of distressed housing sales drops to new low
The share of distressed sales dropped to a new low of 10.5 percent in May, down from 15.4 percent in April and down from 18.3 percent a year ago to the lowest level since January 2011 — the earliest that RealtyTrac has data for this metric.
Metro areas with a population of at least 200,000 with the highest share of distressed sales were:
- Flint, Michigan (26.0 percent)
- Tallahassee, Florida (24.2 percent)
- Memphis, Tennessee (24.1 percent)
- Pensacola, Florida (23.0 percent)
- Ocala, Florida (21.7 percent).
“The market has shifted. In 2010, almost 30 percent of all listings in the Seattle area were distressed — either REO or subject to a short-sale — and today the figure about one-third of that. Although, still running at above historical averages, the decline in distressed sales is not surprising given that we continue to see a decline in these listings,” Matthew Gardner, Chief Economist Windermere Real Estate in Seattle, said in the release. “Moreover, when we look at the decline in institutional investors — as well as all cash buyers — this is a sign that Seattle home prices have escalated to a point that it is increasingly difficult for these buyers to see significant returns on their investments.”
Bank-owned sales
Bank-owned sales accounted for 3.9 percent of all residential property sales in May, down from 6.9 percent in the previous month and down from 9.0 percent a year ago to the lowest level since January 2011.
Metros with the highest share of REO sales were:
- Flint, Michigan (16.0 percent)
- Mobile, Alabama (13.1 percent)
- Tallahassee, Florida (12.6 percent)
- Palm Bay-Melbourne-Titusville, Florida (11.9 percent)
- Fayetteville, North Carolina (11.9 percent).
Markets with highest share of cash sales and institutional investor sales
The top five metro areas with a population of at least 200,000 with the highest share of cash buyers were all in Florida:
- Naples-Marco Island (56.0 percent)
- Sarasota-Bradenton, (54.0 percent)
- Miami (53.4 percent)
- Ocala (49.9 percent)
- Cape Coral-Fort Myers (49.7 percent).
The top five metro areas with a population of at least 200,000 with the highest share of institutional investor purchases were:
- Rockford, Illinois (13.4 percent)
- Tulsa, Oklahoma (12.6 percent)
- Roanoke, Virginia (12.6 percent)
- Memphis, Tennessee (10.2 percent)
- San Antonio, Texas (8.4 percent).
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