Distressed sales, cash sales and institutional investor sales in June were all down from a year ago to multi-year lows even as sales to first-time homebuyers and other buyers using FHA loans increased compared to a year ago in June and reached a two-year high in the second quarter, according to a new report from RealtyTrac.com. Buyers using Federal Housing Administration (FHA) loans — typically low down payment loans utilized by first-time homebuyers and other buyers without equity to bring to the closing table — accounted for 23 percent of all single-family home and condo sales with financing — excluding all-cash sales — in the second quarter of 2015, up from 20 percent in the first quarter and up from 19 percent in the second quarter of 2014 to the highest share since the first quarter of 2013. The report also shows 914,291 single-family and condo sales through April 2015 — the most recent month with complete sales data available — at the highest level through the first four months of a year since 2006, a nine-year high. Investor-driven sales continue decline “As the investor-driven housing recovery faded in the first half of 2015, first-time homebuyers, boomerang buyers and other traditional owner-occupant buyers started to step into the gap and pick up the slack,” Daren Blomquist, vice president at RealtyTrac, said in a news release. “This is good news for sellers in many markets, providing them with strong demand from a larger pool of buyers, and U.S. sellers so far in 2015 are realizing the biggest gains in home price appreciation since 2007. In June, sellers sold for above estimated market value on average for the first time in nearly two years. “Higher-value markets with a larger share of homes priced above the loan limits set by FHA and Fannie and Freddie Mac markets are the most likely to struggle in the second half of the year, as the recovery continues to become more dependent on traditional buyers relying on financing,” Blomquist said in the release. “The health of these high-priced trophy markets will in many ways be tied more to global economic forces driving foreign cash buyers than U.S. economic and real estate fundamentals.” Cash buyers down nationwide, up in New York City and 20 other markets All-cash buyers accounted for 22.9 percent of all single-family home and condo sales in June, down from 24.7 percent of all sales in the previous month and down from 29.1 percent of all sales in June 2014 to the lowest share of monthly cash sales nationwide since August 2008. The June cash sales share was almost half the peak of 42.1 percent in February 2011. Metros with highest share of cash sales in June were: Homosassa Springs, Florida (53 percent) Naples-Marco Island, Florida (52 percent) Miami (50 percent) Sebastian-Vero Beach, Florida (50 percent) New York (49 percent). “The first six months of sales in South Florida have been at a record pace. The Millennials are entering the market along with many homebuyers who had difficulty during the last recession while the investor market has quieted,” Mike Pappas, CEO and president of Keyes Company in South Florida, said in the release. “It is a real market with real buyers and sellers. The buyers have many lending options and are still enjoying low interest rates, and many sellers are selling at their peak prices.” In New York and 20 other markets analyzed for the report, the share of cash sales increased from a year ago, counter to the national trend. The New York metro share of cash sales increased from 40 percent in June 2014 to 49 percent in June 2015. Other markets with an increasing share of cash sales included: Raleigh, North Carolina Greenville, South Carolina Bellingham, Washington (located between Seattle and Vancouver, Canada) Knoxville, Tennessee Providence, Rhode Island San Jose, California. “Cash buyers have been a significant player in the Seattle housing market over the past 18 months, but the modest drop in this buyer segment doesn’t come as a surprise, given the aggressive rise in home prices in recent months,” Matthew Gardner, chief economist at Windermere Real Estate in Seattle, said in the release. “Higher prices are forcing these buyers to dig deeper into their pockets, and this process has started to push some out of the market. The same can be said for first-time buyers; many of them are having a hard time qualifying for a loan also, due to the rise in home prices in Seattle.” “Particularly, in the first-time homebuyer market, we are seeing multiple offers and in many cases sellers are choosing the cash offer over FHA or conventional financing,” Greg Smith, owner/broker at RE/MAX Alliance in Denver, said in the release. “This can skew the numbers of the actual makeup of buyers in the marketplace. As we continue to see the market move toward equilibrium, we should continue to see the FHA numbers grow and a slight decrease in cash buyers.” Institutional investor share in June matches record low Institutional investors — entities purchasing at least 10 properties during a calendar year — accounted for 1.7 percent of all single-family and condo sales in June, the same share as in May but down from 3.5 percent of all sales in June 2014. The 1.7 percent share of institutional investor sales in May and June was the lowest monthly share going back to January 2000 — the earliest data available — and was less than one-third of the monthly peak of 6.1 percent in February 2013. Metro areas with the highest share of institutional investor sales in June 2015 were: Macon, Georgia (10.2 percent) Columbia, Tennessee (9.5 percent) Memphis, Tennessee (8.7 percent) Detroit (7.8 percent) Charlotte (5.3 percent) Other major metros with a high percentage of institutional investor sales included: Tampa (4.3 percent) Atlanta (4.0 percent) Tulsa, Oklahoma (3.9 percent) Oklahoma City (3.7 percent) Nashville (3.7 percent) The share of institutional investors increased from a year ago in just four markets: Detroit; Macon, Georgia; Lincoln, Nebraska; and […]
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